Posts Tagged ‘fraud’

IRS Releases “Dirty Dozen” Scam List

Monday, February 22nd, 2016

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice. 

There have been several posts on this same subject on this website.  While there is not a duplication of information that is being presented, there is often new and different information that should be shared via the Internet.  Supporting rationale for this decision include, but are not limited to:

1.  The “scammers” are using a multitude of different tactics with different degrees of “success” (from their perspective) for each of over twelve different methods in terms of both the resulting financial and emotional pain that is experienced or incurred by their taxpayer victims;

2.  The information and knowledge that is required to defeat these “scammers” has not reached many of the American taxpayers who need to have it.  If this were the case, their “success rate” would be near 0%;

3.  I am continuing to read of more instances of these scamming techniques being utilized in both the social media and the news media reports from the Internet;

4.  I am on the distribution list for information and tax updates e-mails from the Internal Revenue Service.  I am continuing to receive more e-mails on this same subject which has led me to conclude that the IRS also considers this to be an on-going, contemporary problem for many taxpayers. (more…)

Fraudulent Charitable Organization Donation Scams

Wednesday, November 27th, 2013

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.

Depending on your opinions regarding the adverse weather effects of “global warming”, globally we are continuing to see and experience extremes of weather conditions which are causing tremendous amounts of property damage, and significant numbers of deaths and injuries.  Often U. S. citizens feel compelled to make a donation to the humanitarian relief efforts to aid those victims and provide financial assistance.  The assumption that follows is that surely their donation must be to an IRS approved charitable organization, and that the donation can be deducted on their (personal  or business) tax returns for that year. 

However, this assumption could be incorrect.  IF you claim a deduction for a donation to an organization that has not been approved by the IRS, or for which the IRS has revoked their tax-exempt satus, you could subject your tax returns to an audit or review by the IRS.  Based on past experiences, these “tax scam” organizations may use one or more of the following schemes:

The scams use different tactics. Offering charity relief, criminals often:

  • Claim to be with real charities to gain public trust.
  • Use names which are very similar to legitimate charities.
  • Use email to steer people to bogus websites that often look like real charity sites.
  • Contact people by phone or email to get them to ‘donate’ money or give their financial information. 

 Before you may any donation, perform your own “due diligence” activities to confirm that you are sending your money to a bonafide charity.

1.  Go to the Internet, use your search engine, and verify the authenticity of the organization;

2.  Contact the Better Business Bureau (http://www.bbb.org/us/Find-Business-Reviews/) or (http://www.bbb.org/)

3.  Go to the IRS website (http://www.irs.gov) and use the “Exempt Organization Select Check” tool to locate bonafide charities.  Remember, the website may not have all of the latest organizations.  If you can not locate the one for which you are searching, call the IRS at 1-800-829-3676 or 1-800-829-1040. 

4.  If you can not satisfy yourself that the organization is a bonafide entity after completing steps #1-3 above, DO NOT make the donation!  It is most likely that it is a scam operation and that your donation will personally enrich one or more individual people. (more…)

Cyber Crime = Identity Theft & Fraud

Thursday, February 21st, 2013

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.  

This is the fourth article on this subject which has been posted by me on this website (http://www.billseabrookecpa.com/blog/?s=identity+theft ).  Just as a fire needs air, heat, and fuel to exist,  in order for identity theft to occur, there has to be an unsuspecting victim, an account number, and a cyber-criminal.  It is beyond the scope of this article to present the multitude of scenarios that can or do facilitate identity theft.  However, the old adage “An ounce of prevention is worth a pound of cure” is certainly applicable. 

The nucleus of the identity theft situation is the “account number”.  Unfortunately, the most predominantly used account number is our Social Security account number.  Once a cyber-criminal has this number bank accounts and credit cards can be opened, financial transactions processed, identification cards created (fake driver’s licenses) etc.   

Additionally, cyber-criminals can fraudulently file a tax return using your account information and divert any refund which is due you to their own accounts.   There are several steps which you can follow to avoid becoming another “identity theft victim”: (more…)

Be Aware of These Tax Scams!!

Friday, February 17th, 2012

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.

This article addresses some of the more common tax scams that have already been identified from actual filed complaints.  However, there are others in existence.  For many different reasons, in some cases the victims have elected not to file a report or complaint.  In summary, there are far too many unscrupulous people in the United States whose main goal in life is to continuously engage in these activities.

Dirty Dozen Tax Scams

 

The Internal Revenue Service has issued its annual “Dirty Dozen” tax scams list, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Here are five of the Dirty Dozen tax scams for 2012:

Identity theft   In response to growing identity theft concerns, the IRS has embarked on a comprehensive strategy focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued and is working to help victims of identity theft refund schemes.

Identity theft cases are among the most complex ones the IRS handles, but the agency is committed to working with taxpayers who have become victims of identity theft.

The IRS is increasingly seeing identity thieves looking for ways to use a legitimate taxpayer’s identity and personal information to file a tax return and claim a fraudulent refund.

An IRS notice informing a taxpayer that more than one return was filed in the taxpayer’s name or that the taxpayer received wages from an unknown employer may be the first tip off the individual receives that he or she has been victimized. Anyone who believes his or her personal information has been stolen and used for tax purposes should immediately contact the IRS Identity Protection Specialized Unit. For more information, visit the special identity theft page on this website.

Phishing    These scams are typically carried out with the help of unsolicited email or a fake website that poses as a legitimate site to lure potential victims into providing valuable personal and financial information. Armed with this information, a criminal can commit identity theft or financial theft.

If you receive an unsolicited email that appears to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), report it by sending it to phishing@irs.gov.

It is important to keep in mind the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS has information that can help you protect yourself from email scams.

Return preparer fraud    About 60 percent of taxpayers will use tax professionals this year to prepare and file their tax returns. Most return preparers provide honest service to their clients. But as in any other business, there are also some who prey on unsuspecting taxpayers.

Questionable return preparers have been known to skim off their clients’ refunds, charge inflated fees for return preparation services and attract new clients by promising guaranteed or inflated refunds. Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued hundreds of injunctions ordering individuals to cease preparing returns, and the Department of Justice has pending complaints against many others.

In 2012, every paid preparer needs to have a Preparer Tax Identification Number (PTIN) and must enter it on the returns he or she prepares.

Signals to watch for when you are dealing with an unscrupulous return preparer would include that they:

  • Do not sign the return or will not include a Preparer Tax identification Number on it.
  • Do not give you a copy of your tax return.
  • Promise larger-than-normal tax refunds.
  • Charge a percentage of the refund amount as preparation fee.
  • Require you to split the refund to pay the preparation fee.
  • Add forms to the return you have never filed before.
  • Encourage you to place false information on your return, such as false income, expenses and/or credits.

For advice on how to find a competent tax professional, see Tips for Choosing a Tax Preparer.

Hiding income offshore    Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice to prosecute tax evasion cases.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting and disclosure requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.

“Free money” from the IRS & tax scams involving Social Security     Fliers and advertisements for free money from the IRS, suggesting that the taxpayer can file a tax return with little or no documentation, have been appearing in community churches around the country. These schemes are also often spread by word of mouth as unsuspecting and well-intentioned people tell their friends and relatives. Scammers prey on low-income individuals and the elderly. They build false hopes and charge people good money for bad advice. In the end, the victims discover their claims are rejected. Meanwhile, the promoters are long gone. The IRS warns all taxpayers to remain vigilant.

There are a number of tax scams involving Social Security. For example, scammers have been known to lure the unsuspecting with promises of non-existent Social Security refunds or rebates. In another situation, a taxpayer may really be due a credit or refund but the scammer uses inflated amounts to complete the return for a larger refund they’ll run off with.

These are some of the Dirty Dozen Tax Scams for 2012. For a complete list, see IRS Releases the Dirty Dozen Tax Scams for 2012.
Links:

YouTube Videos:

The Dirty Dozen English | Spanish | ASL   

Avoiding Any Possible Exposure to Allegations of Fraud and Criminal Misconduct

Friday, July 29th, 2011

The exclusive purpose for the information which is provided from this website is to disseminate  information, and not to provide tax advice.

An excellent article on this subject was published this month in the August 2011 issue of the Journal of Accountancy, which is an official publication for the American Institute of Certified Public Accountants.   This is a link to that article:  http://www.journalofaccountancy.com/Issues/2011/Aug/20114034.htm   The “Executive Summary” for the article states that “Taxpayers may be subject to criminal prosecution for felonies, including tax evasion, under IRC (Internal Revenue Code) section 7201 and filing false returns under (IRC) section 7206″  “In addition to criminal investigations, the IRS may also pursue civil penalties, including the (IRC) section 6663 fraud penalty.”  

Clearly it is always in the best interests of both taxpayers and business owners to proactively ensure that they never become the subject of these types of investigations by any agency or taxing authority.  Proverbally, Benjamin Franklin reminded us that “An ounce of prevention is worth a pound of cure!”   In a nutshell, either acquire all of the knowledge and expertise that you need to meet ALL of the regulatory requirements for your business operations or engage someone who does have these skills. 

In his play Hamlet, William Shakespeare wrote the line “To thy own self be true..”  In the context of this article it means that you should always be mindful of your own knowledge and skills, and that you should always remain within those boundaries.  If the demands (requirements) of your business or personal financial situation are becoming so complex as to exceed those limitations, contact a professional whose education, knowledge, and experience are appropriate for your situation. 

Finally, if you have been notified that you are the subject of a fraud or criminal miscounduct investigation you should immediately contact an attorney with the experience and skills to assist you in the satisfactory resoulution of these issues.