When I first started getting mail addressed to “Angela Tague, Business Owner,” I was giddy. I opened those letters with pride. They were a sure sign of “making it,” right? It didn’t matter that most of it was junk mail trying to sell me a fleet of business vehicles or insurance for a brick-and-mortar storefront I didn’t even have.
But then came tax time, when I started to receive official-looking letters bearing government-esque seals, return addresses with United States Department of Whatever in the corner and hand-signed letters. Initially, I wondered if I really needed to fill out these forms to be in compliance with state and federal business practices.
Thankfully, I took several small business seminars hosted by the Iowa Department of Revenue, and found out that the letters I had been receiving were spam. These crafty senders hoped I’d share my social security number, state taxpayer ID number and even mail them a check. But it was all bogus. And it’s easy to get sucked in, especially when it’s your first year handling self-employment tax payments.
Don’t Get Duped at Tax Time
Think about it this way: Government offices will only send out information you actually need. They don’t have the budget for piles of promotional junk mail. And they expect you to take the initiative to remit your own estimated self-employment taxes. They won’t send you a bill or a reminder of upcoming payments. In fact, you’ll only hear from the IRS if you don’t file on April 15, making you delinquent on your tax liabilities.
As I inch toward nine years of full-time self-employment, the routine annual correspondence I receive is a refund check from the United States Treasury, usually due to an overage in withholding payments via my husband’s employer. On top of that, I’ll receive a letter from the State of Iowa reminding me to remit sales tax for each county, along with the current tax rate listing for each.
Once you know the routine letters you should expect, it becomes easier to spot the scammers. But for now, be savvy and don’t fall prey to these creative scams falsely addressed by the Internal Revenue Service (IRS). Keep your eye out for the following red flags:
1. Someone asks for immediate payment by telephone. If you’re behind on a tax payment, you’ll receive a notification letter in the mail from the IRS. You may receive a phone call from the IRS, but you’ll never be asked to send payment by wire transfer, debit card or gift card during the call.
2. You’re told your credentials will be suspended. If a persistent caller says they’ll freeze or revoke your business license, driver’s license or immigration status due to a missed tax payment, it’s a scam call. The IRS does not have authority over these areas.
3. A request for a past-due payment isn’t explained and seems wrong. The IRS will allow you to question an amount owed. If a letter, email or call says that the amount owed is not up for discussion, they’re not trustworthy. All taxpayers in the United States have the legal right to appeal and question their tax liability before sending in a payment.
4. You’re asked to pay federal self-employment taxes to any agency other than the United States Treasury. The IRS will only ask you to make payments to the United States Treasury — not subdivisions or partnering agencies. Be wary of official-sounding names like “Federal Tax Department” or “Small Business Tax Collections.” They don’t exist. Payments to the United States Treasury can be made through their EFTPS system, a third-party tax assistant app or by check.
How Do I Know What’s Real?
If you do communicate with an agent from the IRS, they’ll present a HSPD-12 ID card, which acts as “a government-wide standard for secure and reliable forms of identification for federal employees and contractors.” But if you do feel like you’ve already been scammed, complete an IRS Impersonation Scam Reporting form online, send an email to email@example.com or call 1-800-366-4484 to report the incident.
Launching into indy life is exciting, but it’s important to know about the potential dangers out there, too. Once you know what to look out for, it’ll be smooth sailing. Don’t let scammers steal your thunder — or hard-earned income — during tax time.