It used to be just calls, now it’s letters. How can you tell if an IRS letter is fake? Let’s take a quick look at how to spot and handle fake letters.
Now there are fake IRS letters. It’s not just calls anymore.
For most of us in these modern times, it’s easy to recognize scam calls. There’s just so many scammy calls coming through on our phones. At first, these calls used to be scary, but now nearly all of us just ignore them.
In comes the IRS scam letter.
Fraudsters have caught on to their calls not working anymore. They have taken notice that the IRS and the tax practitioner industry has been advising taxpayers not to trust calls. “If the IRS wants to audit you, they will send a letter”, was the message.
So now there are scam IRS letters, of course.
What to do if you receive an IRS letter that you think might be fake
If you receive an IRS letter, the first thing I recommend that you do is call the IRS at 800-829-1040. I know it’s a nightmare to navigate through the touch tones, but be patient and listen to the touch tone options intently until you get through to a human.
You can do it.
Once you get through, just be honest. Tell them that you received an IRS letter in the mail, you are not sure if it is real or not, and you would like for them to look at your account.
If the letter is real have them explain the problem. If you can’t handle or understand the issue, contact your tax preparer (or chat with support if you used an online service). They should explain the letter to you and advise you on how to proceed.
As a last resort, you can hire someone to look at the letters, explain the situation to you, and explain how to take corrective action. If you would like to hire us, click here. We do charge a fee for this service, but we generally put it toward amended return fees if they are needed.
How can you tell if an IRS letter is fake?
First of all, an IRS letter should make sense.
If you just get a bill, with no explanation, it could be a fake. Most IRS letters come with a “proposed adjustment” giving you time to disagree with the adjustment and substantiate your claim. They usually send these before they send a bill.
Of course, if you filed your taxes with a balance and didn’t pay – that could trigger a legitimate letter. You will have to ask yourself if the balance seems reasonable. Late filing penalties are generally (not always) 5% per month up to 25%. Interest is about 6% per month – depending on going rates.
Unless you have a small business, property rental, or claimed a large amount of personal deductions, an audit is extremely unlikely.
But real audits happen, especially among those that claim travel, meals, business use of home, and high amounts of charitable donations (especially non-cash).
Make sure that the letter explains EXACTLY what is being audited. The IRS letter audit letter will list these out very precisely.
If you claimed $25,000 in charitable donations or $8,000 of automobile expenses for your business, and the IRS wants you to prove it, they will ask you specifically to do so.
Other areas that are typically adjusted or questioned is the basis on stock trades, credit form the mortgage credit certificate, claiming head of household status, and earned income credit.
My point is that, unless you have an outstanding balance, the IRS will not just send you a bill. They will have a beef with some part of your taxes and it will probably ring true to you right away.
Also, take a look at this fake letter below. Notice it has no bar codes or scan lines.
It also does not include interest for the late balance.
Also, it say’s”” if you don’t agree with the changes, send your money to…”
That’s a big LOL.
What this means for taxpayers and tax practitioners
Bad news, that’s what it means.
The IRS is already stretched WAY beyond their saturation limits. And I mean WAY beyond.
Have you ever tried to get something fixed by calling or writing the IRS. They are so backed up it’s not even funny.
I’m not saying this to kiss up to them, but I feel so bad for the IRS employees that I interact with. They must have to eat so much crap. If you do talk to them, try to remember this and be patience and nice.
Anyway, now the IRS will have to throw more resources into security and finding a way to collect on unpaid taxes. It’s not going to be easy once no once trusts IRS letters anymore.
If the agency can actually figure out how to get more funding, much of it will have to be thrown into fraud detection and prevention.
I think the IRS needs more funding.