Last week police in a suburb of Mumbai, India arrested 70
people for allegedly running a call center scam that made thousands of calls
per day to Americans, telling them they owed back taxes to the Internal Revenue
Service. Reps threatened consumers with imminent arrest if they didn’t pay.
According to the Wall
Street Journal, U.S. authorities say that more than 8,800 victims have
paid more than $47 million as a result of scams like this.
This incident is the latest in a series of scams raising
concerns about the renewed IRS program to begin private collection of certain overdue
federal tax debts. Mandated by the Fixing America’s Surface Transportation Act, or “FAST Act” signed in late 2015, this will be the third attempt at such a program by the IRS.
Earlier programs occurred in 1996 and 2006.
insideARM Perspective
Late last month insideARM reported
about the current IRS plan, and the Agency’s award of the contract to four
firms. Due in part to the recent scams, the IRS has given consideration to how to help avoid taxpayer
confusion that could be caused by third parties calling on its behalf.
According to the IRS
announcement,
The IRS will give each taxpayer and
their representative written notice that their account
is being transferred to a private collection agency. The agency will then send
a second, separate letter to the taxpayer and their representative confirming
this transfer. Private collection agencies will be able to identify
themselves as contractors of the IRS collecting taxes.
The IRS will do everything it can to help taxpayers avoid
confusion and understand their rights and tax responsibilities, particularly in
light of continual phone scams where callers impersonate IRS agents and request
immediate payment.
Private collection agencies will not ask for payment on a prepaid
debit card. Taxpayers will be informed about electronic payment options for
taxpayers on IRS.gov/payments.
Payment by check should be payable to the U.S. Treasury and sent directly to
IRS, not the private collection agency.
The IRS will continue to keep taxpayers informed about scams and
provide tips for protecting themselves. The IRS encourages taxpayers to visit IRS.gov for
information including the “Tax Scams and Consumer Alerts” page.
For more information visit the Private Debt Collection page on IRS.gov.
According to the Wall Street Journal, it seems that the
outsourcing industry in India – like that in the United States – is also
scrambling to manage its reputation because of isolated but highly publicized
incidents like this. A spokesperson said that, generally, larger firms have
more sound and contemporary [security] practices in place, since they work for
large global clients.
Indeed, the research
we at insideARM did several years ago into complaints to the Federal Trade
Commission revealed that the most egregious problems – for instance, where
collectors threatened consumers with arrest or bodily harm – rarely (if ever)
came from legitimately operating collection agencies that could be identified.
They came from scam operations set up for that purpose only.
