SCAMS | The IRS Is NOT Calling You!

The following was sent out by Michelle Singletary of the Washington Post:

If you really owe the IRS, they will send you a polite letter to let you know. They will never ever call you on the phone. If someone says he’s calling from the IRS, hang up.

I get it. A lot of people are super scared of the Internal Revenue Service. The power the IRS has to collect tax debt can instill a lot of fear.

But it’s that fear that fraudsters are using to con people into giving them money by impersonating someone from the IRS.

I’ve said it before — How to spot a tax scam – but let me repeat it again.
— The IRS would not initiate a call to you about a tax debt. You would get a letter that is actually very polite and respectful. The agency mistakenly thought I owed back taxes (Handling a heart-stopping letter from the IRS). I got a letter. Then, I got another letter. What I never got was a telephone call. EVER!
— The IRS would not threaten to send police to arrest you. Please don’t let anyone scare you into thinking you’ll be arrested. It’s a lie.

Read this from the IRS: Phone Scams Continue to be a Serious Threat
— The IRS would not demand that you wire money. Read or listen to this from NPR: Money Transfer Companies Fight Back Against IRS Scammers
— The IRS would not ask you to pay your debt using iTune gift cards or any other type of gift or debit cards. Read this blog posting from the Federal Trade Commission: Scammers push people to pay with iTunes gift cards

Many of the people getting caught by this scam are seniors. Here’s a story one reader sent: “A member of our family was targeted and unfortunately fell for this scam not long ago. Being elderly he didn’t understand that the IRS is NEVER going to call you to demand money. Fortunately for him, the bank teller stopped the transaction when she realized it was indeed a scam.”

Thank heavens for an alert bank employee.

I’ve been writing about this scam lately because even folks who spot the scam can still be scared.
Here’s one story: “Your morning column about IRS scammers was so timely! I had a harrowing experience with a caller who was extremely persistent and adamant that I owed the government $3,000 plus and needed to pay at least a $500 deposit immediately or I would be arrested,” a reader wrote. “When I protested that I had never received anything in writing, he explained in detail that I had not responded to a mailing and a second mailing had been sent to my ‘back up address’ with no response, so that’s why a warrant had been issued against me. (That’s when I started really suspecting the whole thing.) Even though I was pretty sure from the beginning that it couldn’t be true, he nevertheless frightened me, and it took a lot of strength to tell him I was hanging up to see if I could verify his information before I released any money.

He was VERY pushy, very urgent tone in his voice, and repeated several times that I would be arrested if I hung up! I reflected with a family member how easy it might be for a more timid person to respond to his insistent request for a $500 deposit (and access to my credit card info). Is it true that the IRS never initiates legitimate calls?”

Yes, very true. If you get a call from someone claiming to be from the IRS and you hadn’t called the agency, it is 100 percent a con.

The predators impersonating the IRS make me want to lose my religion. There ought to be a special wing in prison for them.

The authorities are fighting this fraud, but let’s help others who could be susceptible to this scam.

Let’s start a social media campaign #StopIRSImpersonators. I want you to text, email, tweet and post on Facebook a warning about this con. Each one of you reach out to at least one person and tell them to hang up on these people.

We’ve got to help stop this gravy train because the more the scammers ensnare people, the longer this scam stays around.

Have you gotten a call from an IRS impersonator? I want to share as many stories as possible in hopes that as many people as possible read and heed the warning that the IRS is not calling you. Send your comments to colorofmoney@washpost.com. Please put “That is NOT the IRS Calling You.”

Readers may email michelle.singletary@washpost.com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read previous Color of Money columns, go to washingtonpost.com/business.

RETIREES | Gray-Dependent U.S. Counties

The Tax Foundation, which often encourages states to lower their taxes, produces many comparative tables that interest me.

This week it compares U.S. counties  based on the percentage of the revenues of residents derived from retirement income.

The data from 2012 IRS records include all forms of taxable pensions including Social Security and distributions from IRA accounts.

The interactive map on the web site allows you to get county data by floating your cursor over a map of the USA. (Counties with very small populations are excluded.)

The three most gray-dependent (my term) counties are, naturally, in Florida - Sumter (45.6 percent dependent on retirement income), Charlotte (33.8 percent) and Citrus (33.2 percent) counties, all on Florida's Gulf coast. Northern Michigan and the Pacific Northwest are the other two areas of the United States that are the most gray-dependent.

On the Atlantic Coast side of Florida, the most gray-dependent county is Flagler (29 percent). The other counties along the coast that are at least 20 percent dependent on retirement incomes are Volusia, Brevard, Indian River and St. Lucie.

MUNI BONDS | Rigged Markets

July 16, 2011–An outraged Republican friend sent me a link from Jesse's Café Américain, commenting on SEC and other actions announced on July 7. The related SEC actions, from their announcements, are summarized below. My friend was distressed at the inadequacy of the penalties.

SEC Actions and Related Other Government Actions

The SEC charged J.P. Morgan Securities LLC (JPMS) with fraudulently rigging at least 93 municipal bond reinvestment transactions in 31 states. JPMS agreed to settle SEC complaints of violations of Section 15(c)(1)(A) of the Securities Exchange Act of 1934 by paying approximately $51 million, to be passed on to municipalities that were cheated.

JPMS and its affiliates also agreed to pay $177 million to settle related claims by the IRS and other federal and state authorities.

JPMS improperly won bids by entering into secret arrangements with bidding agents to get an illegal 'last look' at competitors’ bids. Municipal issuers and investors didn't stand a chance against the fraudulent strategies JPMS and others used to guarantee profits.–Robert Khuzami, Director of the SEC's Division of Enforcement.

When municipalities sell securities, they usually invest the proceeds of the sales until the money is needed. As part of its oversight of the tax-exempt market, the IRS requires that such proceeds be invested at fair market value, which is commonly done by utilizing a competitive bidding process. But the SEC claims that during the period 1997-2005 JPMS's fraudulent practices undermined this process. Municipalities paid more for reinvestment products than they should have. JPMS thereby jeopardized the tax-exempt status of billions of dollars in municipal securities. 

When powerful financial institutions like JPMS conspire with each other to intentionally violate regulations designed to ensure fair investment prices, the integrity of the municipal marketplace becomes corrupted. Rather than playing by the rules, the rules got played. - Elaine C. Greenberg, Chief of the SEC's Municipal Securities and Public Pensions Unit.

The SEC complaint filed in U.S. District Court for New Jersey says that JPMS acted as agent for JPMorgan Chase Bank, N.A and on certain occasions:

• Won bids by obtaining information ("last looks") from bidding agents about competing bids. I
• Won bids that were wired in advance for JPMS to win (“set-ups”). The bidding agent deliberately set up non-winning bids from other providers, for whom other bids were wired for them to win. 

The employees involved are no longer with JPMS.

Comment

The SEC gets great credit for nailing this one. The penalties may be inadequate, but it's good to see the SEC taking action. The financial markets in the United States need to have their credibility restored and the SEC has a crucial role in making it happen.