Millions of Americans have been on the receiving end of telephone callers falsely claiming to be from the IRS. Enough people have fallen for this scam over time to make this a lucrative business for the scammers.
At last, one such scammer, Sahil Patel, was sent to prison for 175 months and forced to disgorge $1 million of ill-gotten gains since his arrest back in December 2013. Patel was arrested for his participation in organizing the U.S. side of a fraud ring that used call centers in India to contact American citizens. The calling tactics were fairly sophisticated, even misusing calling services to make the Caller ID display phone numbers coming from the FBI or other federal agencies.
Unfortunately, Patel is but one of many scammers and his arrest barely makes a dent in the rampant and brazen criminal activity we are seeing. The callers are doing their homework – they know enough about the person to make the story believable. TIGTA, the agency overseeing IRS activities, still receives up to 12,000 complaints per week about these calls.
If you receive a phone call claiming you owe money to the IRS, do not answer any of the caller’s questions under any circumstances, no matter how convincing they sound. Instead, ask for the person’s name, ID, and their contact number. If the person immediately hangs up, you can be sure it is as scam. If unsure, contact your tax advisor or call the IRS at 800.829.1040, so your account can be reviewed to be sure there are no issues.
A former worker treated as an independent contractor can ask the IRS to determine whether or not he or she should have been treated as an employee. A worker may decide to file this form when his/her services are terminated, or can’t pay the self-employment taxes due, feels entitled to benefits, or otherwise has reason to want to revisit the worker classification status because, in his/her opinion, being an employee would have been better.
The worker completes the form citing all of the facts and circumstances as perceived by the worker which, invariably, results in the IRS reaching a preliminary conclusion that the worker should have indeed been classified as an employee. The IRS then sends the business a form SS-8, as well as the name of the involved worker, to get the company’s recitation of the facts.
The business should not ignore this form. While the IRS typically disregards the business’ submission, it is still important to accurately set forth the facts. However, just because the IRS issues a determination letter stating that the worker should have been classified as an employee, that does not mean the business has to heed this letter. The letter states that “this determination is binding on the Service,” not that it is binding on the taxpayer. If the facts demonstrate that the business is on solid ground to take the position that the worker is an independent contractor, no other action is needed.
It is, therefore, vital for the business to seek proper advice on worker classification issues to avoid the tax effects of a potentially needless yet costly reclassification of workers.
If your business uses independent contractors or has received a form SS-8, contact Aronson’s tax controversy team at 301.231.6200 to discuss your options.