Steve Klitzner, the IRS Problem Resolution Attorney, joined Good Morning Keys on KeysTalk 96.9/102.5FM this morning to talk about scams.
In this day and age, we all need to be alert to scams that are going around.
Klitzner said, “This is something that’s been going on a while. As a matter of fact, the Commissioner of the IRS got one of these scam phone calls saying you owe the IRS money. We’re going to bring the police out to your house if you don’t give us an iTunes gift card or a Target gift card on the phone. Sometimes they want you to stay on the phone and not talk as you go over and get a gift card to read them the number and people fall for this. I had a criminal lawyer call me who I know and I said you represent criminals. How do you not realize that this is a scam? I had a friend of mine call from Miami Beach. He’s well connected in Miami Beach and I told him it was a scam but just in case he called the Miami Beach Police Department who he knew and he had them come out to his house. I’m thinking so if another police department comes to your house, there’s going to be a shoot out? It made no sense at all. I had one gentleman force me to hire him to get his transcripts because he was so convinced it was real and it wasn’t.”
The IRS will not be calling taxpayers demanding money or gift cards.
Klitzner said, “They never make first contact by telephone. Years ago they did. As a matter of fact, I had a guy who the auditor made the first contact by phone on the day of his anniversary. He thought it was a scam. He cursed her out and hung up on her. He later understood when I explained to her why he did that. But you’ll never hear from the IRS for the first time by a phone call.”
The IRS does not use email, either.
Klitzner said, “They don’t because it’s not secure. So if you get an email saying it’s the IRS, which by the way, there’s some scam rule that these emails have to be grammatically wrong, and have misspelled words. But these are scams also. You will never get an email from the IRS. Ignore those.”
First contact by the IRS is typically done by US mail.
Klitzner explained, “It is now. In 2023, the IRS when a Revenue Officer was assigned the case, they’d go out to the business, they’d go out to the home. But for reasons such as taxpayers pulling guns on them, they decided this might not be a good idea. So since 2023, first contact will always be by mail. It’ll set an appointment, which doesn’t mean that’s the day you have to be there. But it means you need to contact them back. The IRS uses private debt collection agencies, if they are ever going to refer your case to a debt collection agency, you will first get a letter from the IRS before you get a letter from the debt company.”
So watch out for potential scams from debt collectors.
Klitzner said, “Unless the IRS tells you and sends you a letter saying we’re turning this over to this agency, which by the way, here’s a little known secret, when they turn it over to a private debt collection agency, they’ve basically given up on the debt. These agencies have no power to levy, they can’t take your things. All they can do is work a deal. So generally when I’m on the case and I get them, I want them stay on the case. I don’t want them sending it back to the IRS, but I never make a deal with them. I never give them any information. I just let them hang around for as long as they want to hang around. In the meantime, the 10 year statute of limitations for the IRS to collect is running.”
At that point, then is that debt erased?
Klitzner said, “After 10 years, it goes away. Now there are things that taxpayers do during that 10 years to protect their rights that will extend the statutes somewhat. But after 10 years, if the IRS doesn’t sue, which they don’t usually do, then the debt goes away. Every year, my clients save millions of dollars with the statute of limitations. I take credit for it, of course, but it’s not me. All I did was wait them out, and then the debt goes away.”
There have definitely been changes over the years with how the IRS operates.
Klitzner said, “The good thing is, is that they generally make an announcement before they’re going to do something new. They don’t usually do things out of the blue. Unfortunately, sometimes they do. They make an announcement and then they don’t follow through on it. It’s very inconsistent but because all I do is deal with IRS problems, I’ve got a pretty good finger on their pulse and I know pretty much what they’re going to do and when they’re going to do it. Right now, they are gearing up. In the last few months, they have been starting to send out letters that they hadn’t sent since before COVID and now they’re beginning collection action. It’s just up to taxpayers when they first hear from the IRS to protect their rights, because many of the letters come with rights that will expire if you don’t act on them. That’s what you have to be careful on.”
What is the first thing that someone should do to protect those rights?
Klitzner said, “I’m a big advocate of never talking to the IRS and having someone contact them for you, have a representative contact them and the reason is, is you don’t really know what they’re asking for and you will never. It’s just like, if you get stopped by a police officer for running a red light, very rarely are you going to talk them out of it. If they came to give you a ticket, they’re giving you a ticket and it’s the same with the IRS. You’re not going to be able to straighten things out with them on the phone. You have to be very careful. I have a client now where his wife and he talked to the revenue officer and they said some things and created so much confusion that I think the revenue officer thinks they’re laundering money. They’re not. But why they talked to the IRS and why they explained all these things to them, I have absolutely no idea but they just made more trouble for themselves.”
What is a wage garnishment that is legitimately used by the IRS?
Klitzner said, “What happens is, it’s usually when the IRS is frustrated. You have a local revenue officer, you break your promises to them, you’re not contacting them, you’re ignoring them and in order to get your attention more often than not, it’s just get your attention and grab your bank accounts. They levy your wages so that instead of you getting paid, you get very little money and they get the majority of your paycheck. But as a general rule, they do that to get your attention. So that you do what you have to do. Very often, unless there’s an extreme circumstance, we can get the levy removed with the understanding, okay, now we’re going to cooperate, we’re going to give you our financial information, we’re going to file all our returns, and we can work a deal because they’ll always work a deal for the past stuff, as long as you’re staying current now and going forward.”
It’s important not to ignore letters from the IRS.
Klitzner said, “The first letter is not going to come certified. But the real important letters other than that first letter are all going to come certified. The reason they come certified, is they contain rights and they want to make sure you’ve received that letter if you’re going to lose those rights after 30 days or 90 days, which depending on which the letter is. So be very careful, because them just sending it and you refusing it certified mail counts as you receiving it.”
What if you’ve moved?
Klitzner said, “If that’s your last known address, that’s the address on your last tax return, it could count against you. If you’ve changed the address that they send it to the wrong address, that’s okay. But they’re pretty careful at doing that. So if you move, you want them to know where you’re going because when they find you it may be too late and they will find you. So you never want to hide. You always want to change your address, because if there’s an important letter, you want to see it.”
Is the additional 87,000 potential IRS agents happening?
Klitzner said, “They aren’t all agents, there’s people answering the phones, there’s people doing IT, there’s maintenance people. But we have seen here in South Florida, brand new revenue officers. Those are the collectors. We see new revenue officers, I see a new one every week. They’re making up mostly for the people that are retired or moving up or transferring. But we still have more than we’ve had in the last several years, it’s still not enough for them, they really need a lot more. But there are more and more. We’re seeing more revenue agents doing audits than we have over the last few years. So they are ramping up, they are beefing up because the IRS is the only income producing entity of the federal government. Without the IRS, without taxes, they are getting no money. I know they come under fire with Congress a lot. They do a lot of things that get themselves in trouble. But the bottom line is the government needs the IRS and they need them to collect. That’s why they gave them more money. And that’s why they gave them more people they could hire.”
Now that the tax deadline has passed, does focus shift more toward audits?
“No,” Klitzner said, “There’s still a lot of collection work. They have three years to audit. So usually, if something’s more than three years ago, they’re not looking at it. But we see a lot of audits this time of year and a lot of collections. When a Revenue Officer closes out of case, there’s another case in the queue ready for he or she to pick up and start making contact. You never know who’s going to get a Revenue Officer. Generally, they’re bigger cases. But I have many cases with revenue officers where the taxpayer owes $50,000. It’s unusual, but it happens. Most of the time the revenue officers are handling the businesses who aren’t paying their payroll taxes, that one is almost inevitable that there’s going to be a letter and someone’s going to be assigned your case.”
Is there any way to minimize your chance of being audited?
Klitzner said, “I think the best way is to invest in a CPA, an enrolled agent, a good tax preparer, to do your return. Because if there are items on there where suddenly you’re getting a huge refund, or suddenly there’s things on there that are really not true, you have a very good chance of getting audited and if that preparer prepares a lot of returns like that, they’re going to get audited and all their people will then get audited. So go to somebody, spend the time, spend a little extra money, have it done right. There’s no magic formula, no one can get you back money you’re not entitled to and if you go to somebody new do the return right, the chances of being audited are very, very slim.”
Are the preparers liable to the IRS?
Klitzner said, “All they can do I mean, the IRS can slap them with penalties for not doing everything in their due diligence. But the bottom line is taxpayers responsible if the taxes are wrong, you’ve got to pay the taxes, you got to pay the penalty. You got to pay the interest. Sometimes we can get rid of the penalty because they relied on a bad preparer, but for the most part when you get audited, you’re paying what you should have paid in the first place, plus interest, plus penalty, and it could end up being a lot more than it would have been otherwise. So just be very careful with that because if it does look too good to be true, I have a gentleman, he’s a truck driver. He got this huge fuel tax credit back like $60,000. It’s a fake. The preparer prepared it, charged him a lot of money for it and now that preparer disappeared, and he’s on the hook to pay all that money back plus extras. So be careful. Sometimes you have to be careful if you use one of those software products too, because you don’t want to double dip. You don’t want to put in things if it looks complicated that you’re not entitled to. But very often you’re better off using one of those programs than going to a scam preparer that is just going to make things up and get you back money you’re not entitled to.”
There are also companies that may be a little unscrupulous regarding tax relief.
Klitzner said, “I have I get a phone call every day. I use this company in Colorado, I use this company in California. They’ve represented me for years, nothing’s been done, the IRS just levied my paycheck, they just took my bank account, and they’re charging me every single month. They’ll charge them $1,000 a month until the case is over. They never resolve the case. They’re good at taking the money. They’re not good at resolving the case. Think about this. If you have a local revenue officer working on the case, do you think he or she has any respect for some mystery person across the country? The answer’s no. You want someone that deals with them all the time, and works with them all the time, not somebody who’s going to make you these wild promises, because they’re on commission and if you sign up, you’ll never hear from them again. They’ll assign the case to someone in the back room, who may be there for two weeks, four weeks, they may quit next month. And now you have nobody over there representing you. The problem with those companies is most of their money, most of their resources go into the advertising and answering the call, very little resource going to actually working on your case, which is why you hired them.”
Klitzner knows a number of IRS agents as well as how the organization operates.
He said, “I had a revenue officer who was new, I was talking to a while back, and I was making conversations, saying are you new? She said, I’m not going to tell you. I said why not? She said then you’ll take advantage of me. I said no I’m not. But she knew me. I didn’t know her yet. Because they talk. It’s just like anywhere else. They talk about this representative, that representative. So they know who they’re dealing with, so you have to have that reputation of not only being truthful and honest, but aggressively representing your client’s rights. They know I’m not going to let them have something they’re not entitled to but I’m going to treat them fairly. I’m not going to lie to them. I’m not going to ignore them. I’m going to make the best deal for my client. I never want my client to make a deal that sets them up for failure. The IRS wants him to pay $2,000 a month. They’re not going to be able to pay that. Why are we going to make a deal like that? He can pay $500 a month and I have to convince them that that’s what they should take.”
The first consultation with Klitzner is always free.
He said, “If I can help them, I’ll tell them here’s my flat fee and I’ll take care of your problem. If it’s something that I can just tell them what to do, most of the time they really need me but there’s oftentimes people call and it’s like, you know what? You don’t need me. It doesn’t make sense to hire me. Here’s what you do, and you can take care of the problem easily. The consultation’s free and I’m always happy to talk to people.”
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