Distraint Notice Scams
Michael J. Fleming is the founder and president of Sales Tax and More, a full-service consulting and solutions firm with a passion for state tax. He is one of the country's leading authorities on sales tax issues such as consulting and research, registrations, returns, nexus, drop-shipping, eCommerce, and service providers.
Michael is a renowned writer and speaker, and he regularly presents on webinars. He is also the host of the Sales Tax and More Podcast, where he shares his wisdom and learnings with his audience in order to help them navigate the tricky world of taxes.
In this episode…
Mike Fleming and Ellie Moffat discuss what a distraint notice is and answer questions about how to determine if a notice is a scam.
Here’s a glimpse of what you’ll learn:
What is a distraint notice?
What are things you should be looking out for if you receive a distraint notice? How can you tell if it’s a scam?
The general process of determining if a distraint notice is a scam.
Connect with Michael
Episode Transcript - Audio Version
[00:00:00] Welcome to Sales Tax and More, your go to resource for all things state tax related. Now here's your host, Michael Fleming.
Hi, Mike Fleming here, founder of Sales Tax and More. And today's co host of the Sales Tax and More podcast, where we talk about everyone's favorite topic, which is of course, sales tax. And today we're going to be doing a little bit of a public service announcement. There's a scam going out there. It's referred to as the D straint warrant scam.
And we're going to go through that and answer some questions, that Ellie's got for me. But before we do that, let me introduce you to Ellie, who's my co host, Ellie Moffat. Hi everyone, really great to be here as always. And I'm just going to do a quick introduction for Sales Tax and More. Sales Tax and More, we are a
[00:01:00] full service consulting and solutions firm. And we have a really phenomenal team here of experienced tax professionals who are very dedicated to fulfilling your state tax and related needs. So we do a lot of sales tax returns, sales tax registrations, consultations, research, and like our name states, more. So please reach out to us if you'd like to work with us.
If you have any questions about our services, we'd love to hear from you. So Mike, what is a distraint notice? Well, before we get into this, I want to remind everyone I am not an attorney. So this is just general knowledge. It's not meant to be legal advice or or anything else. distraint notice, by the way, it's spelled D.I. S. T. R. A. I. N. T. Pronounced destraint, spelled a little bit differently, but, it basically serves the same purpose as a court judgment. Okay,
[00:02:00] and what are things that people should be looking out for, when they are potentially re, receiving a distraint notice? How do they tell if it's a scam?
What, what are people on, on the lookout for? Okay. Well, have you ever been contacted by state before? I think that's one of the most important things because states would not generally just go to a lien or a warrant or a judgment. They're going to contact you. You're going to know that you get a problem or an issue.
So if it's coming out of the blue, that's the first warning sign. Another warning sign is, you know, these are hard to spot. You've really got to think about. Thoroughly inspect the letter you got because they look legit. I mean, they, they're a little bit scary. So keep calm, and go through it, you know, in a detailed manner. And some things may start to pop out at you. Number one, neither the
[00:03:00] IRS nor the states use the term distraint. So if it says this is a, you know, the type of lean is distraint notice, that's generally a red flag right there. And so far, all of these, notices I have seen, say distraint. So Ellie is going to put out some examples also.
But since that's not a term that's generally used, sounds confusing, sounds legal. If you looked it up online, you would see that it has the same force as a court to judgment, but it's not actually used. So that, That's the first one. The second one is, there's a telephone number included on these notices, but generally not an address. So states are generally going to put their address in there, a mailing address or a physical address where you can mail them something.
[00:04:00] So it's just a telephone number, red flag. And a third red flag is, or fourth red flag, whatever number we're up to right now. I can't count. I'm an accountant. What's, numbers don't, don't matter.
They don't identify what type of tax it is. So generally, if a state is coming after you or the IRS is coming after you, they're letting you know what the problem is. And this just says, you got a tax problem, you know, it doesn't identify the specific type of tax so those are some of the ways that you can review if something is a scam But one of the first ones is you know, keep calm things pop out at you when you come it's when you're in a hurry when you're all worried and in a panic That everything looks legitimate When you slow down, sometimes you can start to say, okay, this is someone trying to scam
[00:05:00] me, and knowing your situation, knowing if you have a potential problem, most of the time, our clients that have received these, you know, have been perfect taxpayers. They're not aware of a problem out there. So they're scratching their head and saying, why am I getting this? So that's, that's one of the first things, be aware of your circumstances. Those are what I have to look out for. Yeah, and you know, I'll put in the show notes for this episode. You'll find them on our website.
It's just the general show night show notes wherever you're listening to this podcast at of links to some of the the state that states have actually put out in Caution of these kind of scams as well. So you can see state information too. So Mike, can you review just a really general process when dealing with any notice to determine if it's a scam?
And I know you were kind of, you were talking about things to look out for, but let's, let's help people with their general process here as well.
[00:06:00] Well, one of the things we've done here is, we call the number on the, To get more information. We want to find out what they're saying. So the more you question them rather than just go along, you know, don't let them bully you.
You can say, ask for a name. Hey, can I get your name? I want to call the state directly, and find you through the state. And usually they'll hang up on you. They've hung up on us. We've called multiple times. They don't want to, they don't want you calling the state. They may argue with you why you can't call the state directly.
But why in the world would you not be able to call the state? So, asking for their name. A lot of times they won't give you a name or they'll make up a name. It's hard to know if someone's making up a name, but. As if, you know, the, the biggest way that we have ruffled their feathers, that we've flustered them, is tell them we're going to call the state
[00:07:00] right now. And, how do I get the state to direct me to you? And if it's a legit. Then they should be able to tell you that. If it's not legit, then they're gonna go away. Now, another thing to do is call the state and say, Hey, I just got one of these, notices saying that I've got a distraint notice. And, there are any judgments against me, any liens against me, you know, inquire with the state.
I don't appear to, to, I haven't received any communications as to being behind on any of my taxes. So. Could you let me know what this is about? So check with the state. You never, ever, ever want to pay anybody or send money to anybody without making sure that it's true. And even if it's true, states are not always right.
I know this may come as a shock to many of you out there, but states get it. A lot of times and sometimes you just need to provide the
[00:08:00] documentation showing that, hey, this was paid and it was paid on time. And then all of this would go away if it was real. So always call the state and figure out what something is and then figure out how to go from there.
And if you're really worried about this, call the, the number and ask them how to, that you heard there's a lot of scams out there and you want to call them directly through the state, to make sure that they are not a scam. And generally they're going to go away at that point. So there are certain states, I know that Maryland has put a notice out there.
I know that Hawaii has put a notice out there and Ellie will, post those, notices so that you can take a look at them where it talks about these issues. So the states are, or some of the states are aware of these issues. How do they find out who to contact? Well, I don't know. There's a lot of ways. A lot of states, you know, who's registered for sales
[00:09:00] tax is a, public information. So a lot of states actually sell information that really gets me. But people can buy your information directly from the states. So that's how. Well, they, they can find you, but, you know, just make sure you don't send any money.
You don't give out any social security information. You know, sometimes they'll say, well, we just want to make sure this is you, can you give us your social security number? You know, they're just fishing for information, before you actually know who someone is, never give out any information, never send them any money, always question.
So that's one of the ways to protect yourself. I'm a little bit of a skeptic on everything. I believe it's not real until I figure out it is real, but that's just me. Keeps me out of, out of some trouble, gets me into some trouble every once in a
[00:10:00] while, so, but, most of the time it keeps me out of trouble, and Ellie, that's, you know, don't have a whole lot of information on here, just want to alert people that there is a lot of scams going on, and they just need to be aware of it, and if they get this, You know, don't panic.
Yeah. Short and sweet today. And like Mike said, we just really wanted to let everyone know. So if you have sales tax needs, though, we do offer many solutions and services. We have a lot of free resources on our website as well. So you can reach out directly to me. If you have any questions, my email is E Moffat, E M O F F A T at sales tax and more.
com. Our website is sales tax and more. com. And we hope you, we hope you continue to listen. Please like, and subscribe our podcast. If you've enjoyed what you've heard today. Thanks everyone. Hope to see you on the next episode of the Sales Tax and More podcasts. Bye bye. Thanks.