Protecting Taxpayers from Return Preparer Fraud Slides/Protecting... “Family Tree Taxes”...
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Our mission at CFED is to make
it possible for millions of people to
achieve financial security and
contribute to an opportunity economy.
Who We Are
How do we do it
We push to expand innovative practical solutions that empower low- and moderate-income people to build wealth.
We drive policy change at all levels of government.
We support the efforts of community leaders across the
country to advance economic opportunity for all.
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Introduction to Fraud.org
Presented by: John Breyault
Vice President, Public Policy, Telecommunications, and Fraud
●Who is NCL?
●What is Fraud.org?
●How do we handle consumer complaints?
●How do we analyze complaint trends?
●How can you get involved?
What Are We Going to Talk About?
The National Consumers
League is the nation’s
pioneering consumer
organization. Founded in 1899,
our non-profit mission is to
advocate for social and
economic justice for
consumers and workers in the
United States and abroad
Who Is NCL?
WWW.FRAUD.ORG
What is Fraud.org?
A clearinghouse for consumer education
materials related to frauds and scams of all
kinds
A hub for sharing consumer fraud
complaints with law enforcement
An early-warning service to alert consumers
about emerging scams
A Clearinghouse for Consumer
Education
More than 100 articles about common scams,
with tips for spotting and avoiding
A special “Data Breach HQ” to help consumers
about reducing their risk, find information about
recent breaches and a step-by-step guide for
recovering from identity fraud
A Hub for Sharing Fraud Complaints
Network of more than 200 law enforcement
and consumer protection agency partners
Processed 7,000 complaints in 2016
Provide direct counseling to consumers in
imminent danger of falling victim
An Early Warning Service to Alert
Consumers
Complaint analysis powers monthly fraud
alerts to our email list of press, law
enforcement and individual consumers
Detected growth of iTunes gift card scams,
tax ID fraud, ransomware
Fraud Trends
Yearly Top Ten
Scams report
Analyzes changes
year-by-year,
payment methods,
victim age, etc.
How Can You Get Involved?
Send your clients to Fraud.org for
education, counseling and to file complaints
Tell us about scams you’re seeing with
clients
Sign up for Fraud Alerts
Join our Alliance Against Fraud
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Tax Preparer Misconduct
IRS Efforts To Reduce Tax Preparer Misconduct
• IRS is Committed to Investigating Paid Tax
Return Preparers Who Act Improperly
• Two Major Types of Misconduct
• Conduct Directly Impacts a Taxpayers Return
and/or Refund
• Conduct or Practices That Did Not Impact the
Individuals Return or Refund
• Different Reporting Requirements
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Tax Preparer Misconduct
How To Report Tax Preparer Misconduct
• Examples of Preparer Misconduct That Directly
Impacts Taxpayer’s Return and/or Refund
o Embezzling a Refund
o Altering Tax Return Documents
o Filing a Return Without Taxpayer’s Consent
o Generating Larger Refunds By:
Creating or Omitting Income
Creating False Exemptions or Dependents
Creating False Expenses, Deductions or
Credits
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Tax Preparer Misconduct
How To Report Tax Preparer Misconduct
• Reporting of Preparer Misconduct That Directly
Impacts Taxpayer’s Return and/or Refund
Requires Completion Of Two Forms:
• Form 14157-A, Tax Return Preparer Fraud or
Misconduct Affidavit
• Form 14157, Complaint: Tax Return Preparer
• In Addition to the Completion of Forms,
Taxpayer Should Submit Other Support
Documentation
• Copy of Tax Return
• Evidence Corroborating Misconduct
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Tax Preparer Misconduct
How To Report Tax Preparer Misconduct
• Where to File Information of Preparer
Misconduct That Directly Impacts Taxpayer’s
Return and/or Refund Depends on Taxpayer’s
Status With IRS
• If Taxpayer Has Received a Letter or Notice
from IRS About Their Tax Return
• Mail Forms (14157-A and 14157) and
Supporting Documentation to Address
Contained In Letter or Notice
• If Taxpayer Has NOT Received Letter/Notice
• Mail Forms to Address Taxpayer Would Mail
Their Original 1040 Return
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Tax Preparer Misconduct
How To Report Tax Preparer Misconduct
• Examples of Preparer Misconduct or Practices
To Report That Did NOT Directly Impact The
Taxpayer’s Return and/or Refund
o Failing to Enter a Preparer Tax Identification
Number (PTIN) on a Tax Return
o Refusing to Provide Copy of Tax Return
o Failing to Sign Tax Returns They Prepare and File
o Failing to Return Taxpayer’s Records and/or
Holding the Records Until Preparation Fee is Paid
o Using Off the Shelf Tax Software or IRS Free File
Both Intended to be Used by Individuals
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Tax Preparer Misconduct
How To Report Tax Preparer Misconduct
• Reporting of Preparer Misconduct That Does
NOT Directly Impacts Taxpayer’s Return and/or
Refund Requires Completion Of One Form:
• Form 14157, Complaint: Tax Return Preparer
• In Addition to the Completion of Forms,
Taxpayer Should Submit Other Support
Documentation
• Evidence Corroborating Misconduct
• Mail Information to: IRS
Attn: Return Preparer Office
401 W. Peachtree St, NW – STOP 421-D
Atlanta, GA 30308
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Taxpayer Identity Theft or Fraud
Requires Different Reporting Procedures
• Report Possible Identity Theft or Fraud By
Filing:
• Form 14039, Identity Theft Affidavit
• Where to Mail Form 14039
• If Return Has Been Filed
• Mail to IRS Location Where You File
• If Taxpayer Has IRS Letter or Notice
• Mail to Address on Letter or Notice
• No Current Tax Related Issues
• Mail to IRS, Fresno, CA 93888-0025
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IRS Resources
IRS.gov Page on Preparer Misconduct:
https://www.irs.gov/tax-professionals/make-a-
complaint-about-a-tax-return-preparer
Form 14157-A - Affidavit
https://www.irs.gov/pub/irs-pdf/f14157a.pdf
Form 14157 – Complaint
https://www.irs.gov/pub/irs-pdf/f14157.pdf
IRS.gov Page on Identity Theft
https://www.irs.gov/individuals/identity-protection
Form 3949-A – Affidavit
https://www.irs.gov/pub/irs-pdf/f3949a.pdf
https://www.irs.gov/tax-professionals/make-a-complaint-about-a-tax-return-preparer https://www.irs.gov/pub/irs-pdf/f14157a.pdf https://www.irs.gov/pub/irs-pdf/f14157.pdf https://www.irs.gov/individuals/identity-protection https://www.irs.gov/pub/irs-pdf/f3949a.pdf
Senior Analyst Eulonda Lea IRS Criminal Investigation Office of Refund Crimes
Return Preparer Fraud Criminal Perspective
Internal Revenue Service Criminal Investigation Mission
Criminal Investigation serves the American public by investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.
Office of Refund Crimes
• Refund Fraud
– Return Preparer Program
– Questionable Refund Program
– Identity Theft
• Information Security Evolving Threats
– Data Breaches
– EFINS/PTINS
– False/fraudulent ITINs
Return Preparer Fraud
• Generally the orchestrated preparation and filing of false income tax returns (paper or electronic form) by unscrupulous preparers who may claim:
– inflated personal or business expenses, – false deductions, or
– unallowable credits or excessive exemptions, fraudulent tax credits, such as the Earned Income Tax Credit (EITC)
• Preparers' clients may or may not have knowledge of the false expenses, deductions, exemptions and/or credits shown on their tax returns.
Warning Signs of Potential Fraud
• Income insuffi
