Lisa Gray

ContactLisa Gray has been a wealth writer since 2001. She has been involved in the wealth management industry since 1988. She is the author of two bestselling books—The New Family Office and Generational Wealth Management.
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graymatter Strategies LLC

Tax Scam Alerts edit
Tuesday, March 20, 2012 08:46

Tags: client education | fraud | Taxes

It’s tax time. And many of your clients are scrambling to get forms together, fund that IRA they set up in December, or get the cost basis of grandma’s stock they sold to pay her retirement home expenses. It’s also a prime time of vulnerability. Scam artists are everywhere; they’re not just in your inbox. They’re also of the face-to-face, snail mail, landline, and online varieties. And they can be pretty inventive. Here are some things you should help your clients watch out for:
 
Identity Theft: Your client gets an email notice saying they submitted more than one tax return or about a former employer you didn’t have. They can report it on the IRS website.
 
Old fashioned Phishing:  We’ve all gotten these. Your account needs more information. Please login and update your account. It can look a lot like the real deal. They’re even phishing by text and social media these days. Best policy is just not to provide any of that information over the phone or online. Call and talk to a person at the bank or institution to check it out. The IRS also has a phishing reporting service. 
 
Tax Expert Imposter: This is the person with the strip mall office who either gets paid with part of your refund or doesn’t sign the return. Ask for a Tax Preparer ID number.
 
Offshore Tax ‘Shelters’: Have you ever gotten a phone call or email about hiding assets offshore? That happens to be illegal and the IRS is all over it. If your clients have offshore accounts, make sure they report them.
 
Fudging Income & Expenses: Simply put, don’t claim expenses you don’t have or credits you can’t legitimately take advantage of.
 
Reporting No Income. At All: There is a Form 4852 and an amended 1099 form on which people adjust their income to zilch. The IRS doesn’t buy this.
 
Free Money: You can’t even trust your church on this one. Claims offering refunds from the IRS and Social Security benefits to which you are not entitled are everywhere. These scamsters charge a fee for filing the claim for you.
 
No Need To File Taxes: There are all kinds of ideas for avoiding tax liability. One popular one is the statement that paying taxes is voluntary. 
 
Filing False Documents: This involves using 1099 Original Issue Discount (OID) and other forms to lay claim to refunds you are not due.
 
Charitable Donations: Make sure you’re giving to a legitimate 503(c) registered foundation or your tax deduction may not stick.
 
Using A Corporate Structure: Corporations can easily be used to launder money and report less income than has been earned. Corporate entities can also be used as fronts to deflect ownership.
 
Devious Use Of A Trust: Trusts are taxed, pure and simple. Any use of a trust to diminish income, estate, or other tax liability just will not work.
 
Educating your clients on these and other traps builds trust. And everyone knows education is the very best form of marketing.

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