IRS Warns of Phone Scam

The IRS is warning the public about a phone scam that targets people across the nation, including recent immigrants. Callers claiming to be from the IRS tell intended victims they owe taxes and must pay using a pre-paid debit card or wire transfer. The scammers threaten those who refuse to pay with arrest, deportation or loss of a business or driver’s license.

The callers who commit this fraud often:

  • Use common names and fake IRS badge numbers.
  • Know the last four digits of the victim’s Social Security number.
  • Make caller ID appear as if the IRS is calling.
  • Send bogus IRS emails to support their scam.
  • Call a second time claiming to be the police or DMV, and caller ID again supports their claim.

The truth is the IRS usually first contacts people by mail – not by phone – about unpaid taxes. And the IRS won’t ask for payment using a pre-paid debit card or wire transfer. The agency also won’t ask for a credit card number over the phone.

If you get a call from someone claiming to be with the IRS asking for a payment, here’s what to do:

  • If you owe federal taxes, or think you might owe taxes, hang up and call the IRS at 800-829-1040. IRS workers can help you with your payment questions.
  • If you don’t owe taxes, call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484.
  • You can also file a complaint with the Federal Trade Commission at FTC.gov. Add “IRS Telephone Scam” to the comments in your complaint.

Be alert for phone and email scams that use the IRS name. The IRS will never request personal or financial information by email, texting or any social media. You should forward scam emails to phishing@irs.gov. Don’t open any attachments or click on any links in those emails.

Traditional IRA Distribution Rules

Taxpayers aged 70 1/2 and over must take withdrawals from their traditional IRAs by December 31 or pay a penalty.

The penalty is equal to fifty percent (50%) of the amount that should have been withdrawn but was not.

Unlike other types of distributions, this required distribution is not eligible for roll-over treatment into another IRA to avoid the distribution and resulting income tax.

The required distribution may be computed for you by the trustee of the IRA or your money manager or investment advisor. If not, you will have to compute it yourself.

To compute the required distribution:

  1. Divide the balance as of December 31st of last year for each IRA by the appropriate factor for your age. The factor may be obtained from IRS Publication 590.
  2. Sum the amounts computed in step 1. This is the required distribution.

Even though the required distribution is computed using all of your IRAs, the actual withdrawal can be taken from any IRA, or multiple IRAs, that you choose.

 IRS Circular 230 Disclosure

Pursuant to IRS Regulations, we inform you that any tax advice provided or implied on this post (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed on the taxpayer.

While the information contained in this post is believed to be reliable, we cannot guarantee its accuracy or completeness.