Five-Point Action Plan for Turning Tax Scam Threats into New Opportunities

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How to advise clients of the IRS 'Dirty Dozen' fraud schemes.

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By Rick Telberg
CPA Trendlines

For the third year in a row, the Internal Revenue Service is listing the “Dirty Dozen” scams that can land taxpayers in the hands of crooks… or in jail.

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Tax professionals are well-aware of the risks, with almost half in some of our tracking polls reporting "security, privacy and identity theft issues" as one of their chief concerns this year. In fact, savvy tax professionals are proactively advising clients about these common scams.

About half of the 12 scams are the kind that crooks perpetrate on unwitting citizens. The other half are common attempts by tightwad taxpayers to minimize their taxes, risking legal repercussions. But each and every one presents an opportunity to better serve existing clients and to demonstrate expertise to prospective clients. CPA Trendlines is hereby passing along the IRS warnings so that they can be passed along to clients. Clients—and even potential clients—will appreciate the advice from their tax practitioner.

The Dirty Half-Dozen Scams That Clients Should Watch Out For:

  • Phishing: These are emails that try to entice suckers into revealing personal or financial information. Younger clients can probably smell a phishing expedition a mile off. Older clients, however, might need to be shown some examples of scams. Remind them that the IRS will never contact them by email about a bill or refund. Just because an email says it’s from the IRS doesn’t mean it really is!
  • Phone Scams: There has been a surge in callers claiming to be IRS agents. Sometimes they ask for information. Sometimes they demand payments for supposed tax bills. Clients should know that they can just hang up, or they can refer the caller to their tax preparer.
  • Identity Theft: Fraudsters can use social security numbers to file fake tax returns. There’s not much clients can do if their social security number is already out there on the black market somewhere. But they should advised of the danger of hackers. Advise clients how to use firewalls and anti-virus software.
  • Fake Charities: Around tax time, fake charities come out like bugs in spring. They contact taxpayers and suggest deductible donations. They often use names that sound like real charities. IRS.gov has tools to check the status of charitable organizations.
  • Fake Tax Preparers: Nobody can spot a fake practitioner better than a real practitioner. Be on the lookout for them, and make clients aware that there really are fly-by-night storefront preparers who exist only to make off with refunds or steal identities.
  • Inflated Refund Claims: Promises of big refunds are an age-old trick for luring taxpayers away from bona fide tax practitioners. Don’t let your clients fall for that, and even if they’re intent on taking their business to the scam artist down the street, warn them about signing blank returns or agreeing to a fee based on a percentage of a refund. Watch for fliers, ads, and suspicious storefronts.

Action Plan:

Decide how best to deliver these warnings to your clients.

  1. A newsletter is an easy way, but also easily ignored.
  2. A webpage updated regularly will be an ongoing reason to contact clients.
  3. Email alerts are also good way to maintain contact with clients, but don’t overdo them.
  4. A seminar is a great way to dialogue with clients and attract new clients.
  5. Some clients may accept an offer of anti-virus/cybersecurity services.

 

 

 

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