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3 tips to help spot the tax-related property lien scam

Lien on calculator_Mike Lawrence-CreditDebitPro via Flickr CC

Voluntary compliance is the backbone of the U.S. tax system. But when that doesn't work out as Uncle Sam hopes, he knows the Internal Revenue Service has ways to get the money.

One of the most drastic ramifications of unpaid tax is the loss of other property.

In extreme unpaid tax cases, the federal government places a lien on delinquent taxpayers' other assets. This ensures the Treasury gets something of value to offset the overdue tax bill.

Criminals know this process, too.

That's why, warns the IRS, we all need to be on alert for a new tax-related scam that involves fake property liens.

Copying the real IRS lien process: A federal tax lien is the government's legal claim against your property, including real estate, personal property and financial assets, when you neglect or fail to pay a tax debt.

This mechanism is one of the most frightening adverse tax possibilities out there, so it's not surprising that crooks are using it for their own nefarious ends.

And while the property tax lien scam is new, it contains one or more features that have shown up before in other tax cons.

Following are three scam techniques that the property lien con uses and why you should be suspicious.

1. An official looking letter arrives.
The letter, delivered by the U.S. Postal Service, threatens an IRS lien or levy. This is the crooks' way of getting around the usual IRS warnings on what to look for when it comes to scams.

Yes, the IRS does send by snail mail levy notices to who have not paid their back taxes and have an agency lien placed against them. The property lien scammers know this formal tax agency process and are using it as a hook to reel in their victims.

2. Fake tax agency names are invoked.
In this case, however, the mailed lien or levy notice is based on bogus overdue taxes owed to a non-existent agency.

Again, this is where tax and identity theft crooks take a kernel of truth to growth an illegal weed of a scam. The fake government organization names have a legitimate-sounding name like the "Bureau of Tax Enforcement." There is no such agency.

3. The IRS is referenced repeatedly.
In addition to the fake agency name, the mailing may also refer to the IRS. This tried-and-untrue tactic uses the taxman scare factor.

The scammers know that most people freak out when the IRS is mentioned, even when they know they did nothing wrong. In the back of their minds, they're thinking, "Did I make an innocent error that ballooned into this?"

Reassess your tax situation: OK. You got the apparent tax lien letter. Take a breath.

It's always wise to take any tax matter seriously, but don't be terrified by this scam technique into acting rashly and handing over your money to con artists.

Check your records. Have you paid your federal taxes? Good. No problem.

You can contact the IRS directly to make sure that your tax account is up-to-date and that the tax agency knows it.

You can call the IRS toll-free at (800) 829-1040.

Of you can check out your tax history online.

Once you register at for online taxpayer account access, you will be able to, among other things, view up to 18 months of your payment history.

If in checking your tax history you discover that you do owe tax, again contact the IRS directly.

You can do this yourself or hire a tax professional to help you resolve any unpaid tax issues.

Report the tax scammers: Once you've confirmed that your tax situation is fine (or you're taking care of any lingering payment issues), it's time to turn in the crooks.

Contact the Treasury Inspector General for Tax Administration (TIGTA) to report the letter, preferably via the tax watchdog's IRS Impersonation Scam Reporting website.

When reporting the scam, include the key words "IRS Lien."

You also should:

Don't panic and follow the process: The key anytime you get a tax-related letter, phone call or email is not to panic.

Yes, it could be legit. You could owe taxes you overlooked.

But the process of setting things straight with the IRS is not as immediate or simple as scams make it out to be.

As eager as Uncle Sam is to get his due, the IRS won't instruct you to simply and immediately send payment, especially not via some unconventional method. Why yes, I am rolling my eyes at schemes seeking iTunes cards (Really?!) to pay tax bills.

There are precise steps that are taken, including an appeals process if you ultimately disagree with an IRS taxes-due finding.

So take your time, investigate any unexpected demands for tax money thoroughly and get help from the IRS or a tax pro to ensure that things are OK between you and the tax collector.

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Compliance/Non-Compliance is a huge part of the problem with taxation. Both create a massive cost to all taxpayers that don't even include the cost of the tax.

In the U.S., for example, the cost of compliance is approximately $21 billion. That is the overall cost of all the filing and cost of actually figuring out taxes in order to pay them (either through software that must be purchased or a professional that must be hired). The overall cost of non-compliance is $345 billion. That's the cost of everyone who refuses to pay those taxes by not reporting their income or hiding their money. It also includes the cost of the government to respond and find the money. Speaking of the government responding to non-compliance and collecting compliance, this requires an agency. In order to have such a thing, there will be operation expenses. In the U.S., that's $11.5 billion for the IRS to exist and do as much as it does.

This cost is never-ending and only growing in size, as the population expands and continues to be compliant or non-compliant. The only real solution is more non-tax revenue and less taxation.

The more non-tax revenue that's collected, the less cost there is associated with compliance AND non-compliance. Non-tax revenue does not require compliance, since it is voluntary, and it doesn't create an environment of non-compliance, because it is voluntary. The total cost of compliance and non-compliance drops closer and closer to $0 with the more non-tax initiatives in place. Cost of IRS operations would decrease, as well, with less compliance and non-compliance to address.

The Next Step - How to Pay for Government without Taxes -

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