August 7, 2019
You may encounter at any time a variety of tax fraud schemes, from simple refund inflation scams to complex tax shelter deals. Here is a list of some of the frauds to be vigilant about:
- Phishing — Be alert to potential fake emails or websites looking to steal personal information. The IRS doesn't initiate contact about a bill or refund.
- Phone scams — Phone calls from criminals impersonating IRS agents: There's been a surge in these, with con artists threatening taxpayers with police arrest, deportation and license revocation.
- Identity theft — Be as alert as ever about tactics to steal your identity. Be especially aware of criminals filing fraudulent tax returns using someone else's Social Security number.
- Return preparer fraud — Some dishonest preparers scam clients and perpetuate refund fraud and identity theft to hurt taxpayers. Go with preparers who have recognized credentials.
- Inflated refund claims — Some preparers may promise to inflate refunds, asking clients to sign a blank return and promise a big refund, charging fees based on a percentage of the refund. Such fraudsters use flyers, phony storefronts or word of mouth via community groups where trust is high.
- Falsifying income to claim credits — Con artists convince unsuspecting taxpayers to invent income to erroneously qualify for such tax credits as the earned income tax credit. Remember that you are legally responsible for what's on your return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties.
- Falsely padding deductions on returns — Avoid the temptation to inflate deductions or expenses on returns for a fatter refund or to owe less.
- Fake charities — Be wary of charities with names similar to familiar or nationally known organizations. They may be illegal groups masquerading as charities. IRS.gov has tools taxpayers can use to check the status of charitable organizations.
- Excessive claims for business credits — Avoid improperly claiming the fuel tax credit, which is usually limited to off-highway business use in farming. The research credit also needs to be substantiated, satisfying the requirements related to qualified research expenses.
- Offshore tax avoidance — It's a bad idea to hide money and income offshore. The IRS suggests that you come in voluntarily and get caught up on your tax-filing responsibilities.
- Frivolous tax arguments — Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite repeatedly being thrown out in court. The penalty for filing a frivolous tax return is $5,000.
- Abusive tax shelters — Tax structures such as trusts and syndicated conservation easements are sometimes used to avoid paying taxes. The IRS suggests that you should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, seek an independent opinion about complex products you're being offered.
You can protect yourself by choosing a reputable tax preparer and remaining vigilant for such schemes. Ross Hughes and Associates takes fraud seriously and security is our top priority. Phishing attacks are on the rise and make us all more vunerable. To reduce overall exposure to email phishing attacks and to improve data security, our firm has made the switch from vulnerable email to a more secure and efficient communication and collaboration platform called Liscio.
“According to cybersecurity firm Trend Micro, about 90 percent of all data breaches begin with a simple email phishing attack. All it takes is an accidental click of a malicious email to infect your systems and compromise your data. Banks and financial institutions have already moved away from email to communicate and transfer files with clients. Accounting firms must follow suit.” – Darren Root, CEO, Liscio
Liscio replaces portals and allows you (our client) to message us, sign documents, onboard via browser or iPad, and send documents securely. Liscio offers a Mobile App and browser version for your convenience.
We will no longer be communicating through email. We will turn off our portal solution, Sharefile, by the end of this year. If you need access to a document after that, please request the document through Liscio.
If you are a client of Ross Hughes & Associates, have not already been setup in Liscio and would like to be, please call Shannon in our office (904) 641-6288 and she will send you a Liscio invite. Please accept the invite and follow the short step-by-step tutorial attached as a PDF in the email to set up your Liscio account.
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