A buddy recently received this voicemail and forwarded it to me:
“Hi, it’s Samantha Johnson calling from the Relief Center. Call me back at 833-914-0319: our records indicate you have back taxes owed. You are now eligible to get them forgiven by utilizing the Complete Tax Forgiveness program. All back owed taxes may be reduced or even forgiven through this program. However, it is important that we enroll right away, so call me back and we can start the process. It’s simple and fast – a one and done set up.”
This voicemail makes several false or misleading claims. It suggests that the company knows my buddy owes taxes (he does not), and the amount. That’s false and designed to lure the unsuspecting taxpayer into making a panicked call. Scam. There are three, tell-tale red flags in this voice message that signifies it is a scam.
Red Flag #1: Third Parties Rarely Have Access to Tax Records
The company claims that their records indicate they owe back taxes owed, but typically no 3rd party can know that you owe taxes unless the tax agency has filed a lien against your home. Liens against real property (houses, cars) are filed in court and thus are public knowledge. That means that private companies can get a list of people (and their mailing addresses) who owe taxes by combing court records for taxpayers who have recently-filed liens against their property. Under most circumstances, however, the nature and amount of the taxes someone owes is strictly confidential. Even I need power of attorney to be able to speak with the FTB or IRS on behalf of my clients because Congress has strictly limited who has access to taxpayer records that the IRS maintains.
Red Flag #2: There’s No Such Thing as “Complete” Tax Forgiveness
Many people may be tempted to believe tax debt forgiveness programs will get rid of all their tax debt, but it is almost impossible to be forgiven entirely of tax debt. The two circumstances for this are (1) being made “Uncollectible” by the IRS – when you literally cannot afford to pay anything and you have no assets, or (2) if the 10-year statute of limitations on collections efforts has expired. Otherwise, the amount of tax debt that can be “forgiven” or gotten rid of depends entirely on the unique circumstances of what you owe, for when and why. Some people may not owe what the IRS says they do (perhaps they can get penalties removed legitimately), but no third party can guarantee that, especially with no information about the taxpayer’s tax debt, as is the case for my buddy above.
In general, if the message sounds too good to be true, it’s typically a scam. The fact is that, if the Assessment Division of the IRS has determined you owe the tax, then the Collections Division of the IRS will purse payment relentlessly, not grant amnesty. The IRS is primarily a law enforcement agency (rather than a tax collection agency) and attempts to apply tax laws as equitably to every taxpayer as it.
Red Flag #3: You Need to Respond Quickly
Being instructed to “hurry” or “pay now” is almost always the sign of a scam. The company behind my buddy’s voicemail just wants to rope him into paying off his taxes through them, for which they will charge my buddy a fee – a fee for something he could do entirely on his own. The scammy company urges swift action because it’s a sales-driven organization that makes its money by signing up as many unsuspecting people as quickly as it can. The scammy company may be in hurry – but you shouldn’t be.
Even the IRS does not urge “pay immediately” in its initial contact with taxpayers who owe. First, the IRS will NEVER call or email you; they send written notices by US Postal service only, unless or until you are formally audited and have been assigned an auditor. Your auditor may contact you by phone but even s/he is likely to contact you primarily by mail and email. Second, the IRS is required by Congress to send multiple letters warning you that you owe and giving you time to make payment arrangements. The only time you will receive a letter from the IRS insisting you pay within a week or 10 days or immediately is after they have sent multiple, prior Notices that you owe. And, the IRS “pay now” letter will always be send be certified mail. There are many other common online scams such as phishing emails and fake IRS social media accounts that may contact taxpayers about a refund or a grant, these are always going to be a scam.
Legitimate Ways to Address Tax Debt
So what if you have tax debt you cannot full-pay? What are the legitimate ways to address it? Here are the most common ways of dealing with tax debt:
- Offer-in-Compromise: Will release you of some to all of your tax debt and thus this is the closest thing to actual tax “forgiveness” the IRS offers. However, an offer in compromise is difficult to get because they are mostly granted to people who are disabled, retired, or those who will most likely not earn money in the future.
- Discharge of taxes in Bankruptcy: Under certain conditions, state and federal taxes can be discharged in personal bankruptcy. The most common limitation is that the tax debt must be three years or older to be dischargeable. Filing for Bankruptcy can allow for the discharge of federal and state taxes depending upon the conditions.
- Uncollectible Status: This is when the IRS temporarily pauses collection actions for up to 3 years because the taxpayer has no to little assets to sell to repay the IRS, and only enough income to meet basic living expenses. This involves sharing all financial information and accounts with the IRS to prove that you have no “excess” income or assets with which to pay the IRS.
- Collections Statute of Limitations: The IRS has 10 years to collect on back taxes, and then it may no longer do so. There are certain things that stop this 10-year statute of limitations, however.
Tempted by Phony Promises to Get Rid of Your Tax Debt? Call me and I’ll give you a sense of the workable alternatives the IRS will accept, not a false promise of blanket amnesty.
February 28, 2025