Protecting Taxpayers from Return Preparer Fraud Slides/Protecting... “Family Tree Taxes”...

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Transcript of Protecting Taxpayers from Return Preparer Fraud Slides/Protecting... “Family Tree Taxes”...

  • 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.

  • 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

  • 25

    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

  • 26

    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

  • 27

    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

  • 28

    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

  • 29

    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

  • 30

    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

  • 31

    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

  • 32

    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