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IRS warns about clean energy tax credit scams; tax relief robocalls

The Inflation Reduction Act is a nearly 2-year-old law — dubbed by President Joe Biden’s administration as the largest investment ever in clean energy and climate action. But apparently, it’s still topical enough to be used to trick people into believing some tax-related shenanigans and scams.

Keep that one in mind the next time you get an illegal tax-relief robocall or hear what might seem like a really odd tax tip on how to cut your tax bill by purchasing clean energy credits.

First, consider a message left on a friend’s phone on July 8 about some so-called overdue tax debt that now has been miraculously classified as noncollectible and suddenly, the person is exempt from repayment. The calm voice on the line, who sounds more than a little artificial to me, gets you lulled into thinking that maybe you should make a call back and talk this idea over. Maybe there is a way out of thousands of dollars in debt?

“This adjustment is a component of the new federal economic recovery initiative, widely discussed in media,” according to the soft voice on the line. Before proceeding with tax filing or arrangements for debt payment, the robocall belle said, “Please contact us.”

My friend didn’t call because she doesn’t owe taxes. She also thought the whole thing was super strange, given that it’s happening at the peak of a highly charged (times-10) presidential election season, not during tax time.

The voice never identifies herself. Never claims to be from the Internal Revenue Service, though you might infer that. Never mentions some debt relief company, though you might infer that the robocall is from one of these outfits.

And the number that’s left to call? Once I looked it up online, I spotted that YouMail lists the Ohio number as one that was once associated with health insurance spam. Now that number is used as part of a tax debt reduction spam, according to YouMail, which estimates robocall volumes and offers blocking services.

Spam tax robocalls are heating up

Illegal tax-related robocalling is drawing heat from the Federal Communications Commission. In some cases, the calls refer to a “Tax Dismissal Program” or a “National Tax Relief Program.” Neither programs exists, the FCC notes.

In April, the IRS and Federal Trade Commission joined the FCC in a “Spring Cleaning” initiative to hang up on the phony tax relief calls. YouMail, a software app company, had estimated that some 15.8 million such tax-relief calls were transmitted during the three months preceding the start of the 2024 tax filing season.

The FCC and the Industry Traceback Group traced a number of these calls to an originating provider for the calls named Veriwave Telco.

Some prerecorded messages transmitted by the campaign offered to “rapidly clear” the call recipient’s tax debt, according to the FCC. Some consumers were asked to provide their dates of birth and Social Security numbers.

On July 8, the FCC’s enforcement bureau accelerated its illegal robocall blocking efforts against Veriwave Telco, which the FCC said has not complied with call blocking rules for providers suspected of carrying illegal traffic.

YouMail’s CEO Alex Quilici said in an emailed statement to the Detroit Free Press that tax relief scams fall into two buckets — fraud designed to steal your Social Security number, credit card numbers and other information; and deceptive ways to get money upfront for “whatever it is they’re supposedly doing for you, which they never do.”

In some cases, some groups will try to pitch you a personal loan to cover the tax bill, say $30,000 or $40,000.

Consumers who are on edge about their finances can be vulnerable to a quick-fix robocall, which, of course, only exacerbates a tax debt problem.

“The people who are in trouble are likely to respond to them,” Quilici said, “which puts them in more trouble because they paid a fee and the problem wasn’t solved so the debt just gets bigger.”

The tax-relief robocalls seem to involve more different names of “companies,” he said. But it’s hard to know yet whether it’s the same people pretending to be different folks, or different scammers.

Scammers gear up as IRS notices hit

Tax scams don’t just hit in tax season.

“Right now is prime time for IRS notices to taxpayers who owe tax, and likely, many scammers know that,” said IRS spokesperson Eric Smith.

Perhaps you filed a tax return on time but didn’t pay all the money that you owed in taxes. If so, your first bill will typically come to you in early June, Smith said, and there will be follow-up notices if you don’t either pay in full or arrange a payment plan.

The latest spam call might be a cover version of an old song. It is not that unusual, Smith said, for scammers to reference or appear to reference real programs, tax-related or otherwise. Some scams don’t mention the IRS by name.

The IRS continues to warn taxpayers to avoid promoters who claim their services are essential to magically settle debts with the IRS. Some fraudulently claim that your tax debts can be settled for “pennies-on-the-dollar,” the IRS said, or that there is a limited window of time to resolve tax debts through the Offer in Compromise program.

Not every taxpayer will qualify for an Offer in Compromise, which is a legitimate IRS program. “Some promoters knowingly advise indebted taxpayers to file an OIC application even though the promoters know the person will not qualify, costing honest taxpayers money and time,” the IRS warns.

As a first step, the IRS suggests that tax filers check their OIC eligibility for free using the IRS’s Offer in Compromise Pre-Qualifier tool at IRS.gov.

But no, you don’t want to call that sweet, almost child-like voice back to see how your tax debt is suddenly “exempt from repayment.” That kind of wishful thinking could lead you to lose lots of money.

The clean energy tax credit scam and more

Here are some other tax-related scams to avoid:

Tax credit scam: The IRS is warning taxpayers that a new clean energy credit scam is smoldering this summer.

Unscrupulous tax return preparers are promoting a scheme that targets retirees, as well as wage earners, by wrongly touting the tax filer’s ability to buy clean energy credits to trim their tax bill. Often, the targeted group files a 1040.

But the promoters are misrepresenting the rules for claiming clean energy credits under the Inflation Reduction Act, also known as IRA.

“The preparers file returns that have individuals improperly claiming IRA credits that offset income tax from sources such as wages, Social Security and retirement account withdrawals,” the IRS stated in its July 3 alert.

Outsiders and, yes, apparently scammers, can see the potential for confusion when the new Inflation Reduction Act of 2022 is often referred to as IRA and many people already associate the IRA acronym with the decades-old, tax-advantaged, retirement savings accounts.

The clean energy credit isn’t tax strategy for most retirees. We’re talking about a complex strategy for some filers who can use purchased credits to “offset income tax from a passive activity.”

“Most taxpayers do not have passive income and a passive income tax liability. Most investment activities are not considered passive,” the IRS stated.

Individual taxpayers who claim inappropriate tax credits, according to the IRS, “risk future compliance action by the IRS and are responsible for repaying the inflated credit, plus interest and possible penalties.”

IRS Commissioner Danny Werfel called the scheme yet another example of scammers using the complexity of the tax law to entice people to claim credits that don’t apply to them.

“Taxpayers should be wary of promoters pushing dubious credits like this and others,” Werfel said in a statement.

To report a suspected, abusive tax scheme or a tax return preparer who is promoting such schemes, the IRS said tax filers can use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers.

ID thieves continue targeting tax pros: This summer, the IRS is making a huge push to warn tax professionals that they are “prime targets of criminal syndicates that are both tech- and tax-savvy.”

“Security threats against tax professionals remain a daily threat,” the IRS stated. The IRS has reports of nearly 200 incidents where data for tax professionals was hit through the spring, potentially affecting up to 180,000 clients.

Like with many scams, the threat actors will trick or hack their way into computer systems used by tax professionals to access taxpayer information. Then, ID thieves can use stolen data to file fraudulent tax returns, which look real because the crooks now have some real names and numbers.

When fake returns use real financial information that has been stolen from a tax pro, the IRS stated, the IRS and the state treasurers have a more difficult time detecting fraudulent returns.

Contact personal finance columnist Susan Tompor: [email protected]. Follow her on X (Twitter) @tompor.

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