Some Smaller Scams
When I wrote about tax scams last week, I really didn’t plan on sticking to the same subject this week. Since then, though, I read this article from Accounting Today, and I thought it was necessary to go a little further. And this week, my overarching tip comes in two words:
I tend to talk about the larger tax scams, which can themselves be smart, allowing us to empathize with their victims. Most of them play on fear, an emotion we all experience. They also involve ignorance of the tax audit and collection process. Heck, even as a professional in this area, there are always new things that I learn about it, so it cannot be expected that laypeople will know all the rules.
There are also some smaller-scale schemes out there, though. I realize I may not have given them enough time and in them is where that two-word advice should be used. As an example from the article, a tax refund was delivered in cash to a client in a parking lot. If what you’re doing looks (and probably feels) illegal, chances are really good that it is. This is aside from the fact that the exchange involved $1,400 when the taxpayer was actually owed a refund of more than $8,500.
I don’t write about things like this often because I am confident in the work that my company does and do not operate in such ways. Watching out for such things, however, is something that is good advice beyond the tax realm. When you are giving people access to personal and financial information, you need to feel safe and secure in what they are doing. If someone’s way of doing business seems off, there are enough other people out there who will do what you need. Also, don’t let cost come into this calculus too strongly. There is often a reason when someone’s price seems too good to be true.
The article also mentioned a couple of lawyers who were caught after trying to evade paying all the taxes they owed. These are people who must have known that what they were doing was not on the up-and-up. I could even imagine that they thought their knowledge of the system gave them an advantage in trying to abuse it. Let this be a warning then that there is never a guarantee that punishment can be avoided.
A final commonality between some of these stories is how fraudulent tax returns often involve false credits and deductions. I’m sure that many people whose tax returns were handled by immoral preparers did not know that part of their return was fraudulent. If you are paying a professional to help you, you are relying on their expertise to lead you in the right direction. Being smart in those cases involves having these professionals explain to you what they are doing, and in a way that you can understand. They are your guides through a world that you do not know, but they should be able to talk you through it in a way that makes sense.
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