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You Are A Stinky Low Life Con Artist and I Hate You

Robbery not allowed

Tax Scammers

Stacie Kitts, CPA

I hate you is harsh, but warranted.

I have no reservation is saying ” I hate you if you are a tax scammer con artist.”  You give the tax preparer profession a bad name and I hate you.  You put taxpayers in a precarious position and I hate you.   You make my job harder and I hate you.  You are a disgusting low life taking advantage of low income and elderly taxpayers and I really hate you!!!!

The IRS announced a new series of scams involving tax credits.  The scammers promise the taxpayer a large refund and charges a huge amount of money to prepare the return.

After the IRS rejects the taxpayers claim, the taxpayer realizes they are out the preparation fee with no recourse because the tax preparer has disappeared.

WASHINGTON — The Internal Revenue Service encouraged taxpayers to guard against being misled by unscrupulous individuals trying to persuade them to file false claims for tax credits or rebates.

The IRS has noted an increase in tax-return-related scams, frequently involving unsuspecting taxpayers who normally do not have a filing requirement in the first place. These taxpayers are led to believe they should file a return with the IRS for tax credits, refunds or rebates for which they are not really entitled. Many of these recent scams have been targeted in the South and Midwest.

Most paid tax return preparers provide honest and professional service, but there are some who engage in fraud and other illegal activities.   Unscrupulous promoters deceive people into paying for advice on how to file false claims. Some promoters may charge unreasonable amounts for preparing legitimate returns that could have been prepared for free by the IRS or IRS sponsored Volunteer Income Tax Assistance partners. In other situations, identity theft is involved.

Taxpayers should be wary of any of the following:

  • Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
  • Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling a payout from the IRS.
  • Unfamiliar for-profit tax services teaming up with local churches.
  • Home-made flyers and brochures implying credits or refunds are available without proof of eligibility.
  • Offers of free money with no documentation required.
  • Promises of refunds for “Low Income – No Documents Tax Returns.”
  • Claims for the expired Economic Recovery Credit Program or Recovery Rebate Credit.
  • Advice on claiming the Earned Income Tax Credit based on exaggerated reports of self-employment income.

In some cases non-existent Social Security refunds or rebates have been the bait used by the con artists.  In other situations, taxpayers deserve the tax credits they are promised but the preparer uses fictitious or inflated information on the return which results in a fraudulent return.

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file with little or no documentation, have been appearing in community churches around the country. Promoters are targeting church congregations, exploiting their good intentions and credibility. These schemes also often spread by word of mouth among unsuspecting and well-intentioned people telling their friends and relatives.

Promoters of these scams often prey upon low income individuals and the elderly.

They build false hopes and charge people good money for bad advice.  In the end, the victims discover their claims are rejected or the refund barely exceeds what they paid the promoter.  Meanwhile, their money and the promoters are long gone.

Unsuspecting individuals are most likely to get caught up in scams and the IRS is warning all taxpayers, and those that help others prepare returns, to remain vigilant. If it sounds too good to be true, it probably is.

Anyone with questions about a tax credit or program should visit www.IRS.gov, call the IRS toll-free number at 800-829-1040 or visit a local IRS Taxpayer Assistance Center.

For questions about rebates, credit and benefits from other federal agencies contact the relevant agency directly for accurate information

From The Stupid Preparer Files: Oh I Mean Stupid Attorney Files

Stacie says: “I don’t know about the suspsension period mentioned below.  The IRS reports that attorney Michael McCall was suspended for 24 months from practice before the IRS for writing a bogus tax opinion.  Frankly, if this guy wrote a bad opinion on purpose, I think it should be a permanent suspension.  But that’s just me.”

WASHINGTON — The Internal Revenue Service has accepted an offer of consent to suspension from bond attorney Michael W. McCall. Under the terms of the settlement agreement, McCall will be suspended from practice before the IRS for at least 24 months for writing a false tax opinion. Thereafter, he may petition for reinstatement.

“Practitioners have a duty to their clients, the system, and the municipal finance bond community to ensure that the tax advice they are giving their clients complies with the law and is complete and accurate,” IRS Office of Professional Responsibility (OPR) Director Karen L. Hawkins said.

McCall was engaged by a state of Washington county municipal sewer district to act as co-bond counsel and special tax counsel to write an opinion as to the tax-exempt status of the district bonds issued in October 2000 and to perform due diligence with respect to certain transactional matters relating to the bond issuance. The district issued the bonds for its utility local improvement district for a proposed commercial development. The bonds were issued in violation of state law as the utility local improvement district was located outside of the sewer district boundaries.  The bonds defaulted and have been determined to be invalid.

The OPR alleged that McCall’s opinion on the tax-exempt status of the district bonds was false under Circular 230, Section 10.51(j), and that McCall’s opinion on certain transactional matters was also false under Section 10.51(j).  In addition, the OPR alleged that McCall failed to perform due diligence under Circular 230, section 10.22, with respect to transactional matters related to the bond issuance, including an undisclosed payment to him from bond proceeds received by the developer.

Following an OPR investigation, McCall admitted to violations of Circular 230 for giving false opinions, knowingly, recklessly, or through gross incompetence (Treasury Department Circular 230, Section 10.51(j) (2000)), and for failing to exercise due diligence (Treasury Department Circular 230, Section 10.22 (2000)).
 
The settlement agreement included a disclosure authorization that allowed the IRS to issue this release.

From The Stupid Preparer Files – Woman Claims Connecticut Residents are Not Subject to Federal Income Tax – a Good Post From the Past

[I do love this story – another good post from the past]

By Stacie Clifford Kitts, CPA

I do enjoy reading about how stupid some tax preparers can be. It’s like a tax preparation train wreck. You know the kind you want to slow down to see. Moreover, the messier the scene, the harder it is to look away.

Nevertheless, regardless of how many stories I read, I am still amazed at tax preparers who are willing to go to jail over some income tax. Honestly, the blatant stupidity is genuinely mind numbing.

A favorite concerns a Connecticut woman, Sunita Buddhu who took over her father’s tax practice following his incarceration. Yes, I said it, his incarceration. Daddy went to jail for -get this – producing counterfeit checks from his place of business. The same business where he also prepared tax returns.

Now what do you suppose she told her father’s tax clients? Ummmm – I am sorry that my dad’s in jail – but no worries, I can still prepare your tax return, no need to worry about that fake check thingy.

Outstanding!

Apparently, whatever she said worked because she continued preparing returns. But more baffling even than her clients who agreed to let her continue to work on their returns, is why she agreed to step in. Now let’s see, dad is in jail for fraud, ya think there might be a problem with his tax practice? Ya think- just maybe?

Well yes Sunita, there did appear to be a problem. Following her father’s incarceration, the IRS started a tax preparer investigation and proceeded to audit over 600 returns she and her father had prepared.

Oh, but now the story really gets good. As a result of the investigation, Ms. Buddhu decided it would be a good idea to file amended returns for her clients moving false and obviously disallowed Schedule C deductions to Schedule A. Huh, okay if the deductions are bogus, which apparently they were, hello – they are still bogus regardless of the schedule they’re on. Duh.

But wait, there’s more.

Undaunted, her behavior gets even more bizarre when she informs her clients that the IRS does not have the authority to conduct examinations of Connecticut resident’s tax returns. Okay, talk about frivolous arguments. What is so special about Connecticut?

But wait, there’s more.

She also told her clients that because they were residences living and working in the United States, they were only required to pay social security taxes, but were not subject to income tax. Yep that’s right, according to the Buddhu’s only non-resident aliens are subject to income tax.

But wait, there’s more. Oh, I do love this one.

She actually prepared letters that she mailed to the IRS stating her frivolous tax arguments 1) the IRS did not have jurisdiction over Connecticut residents and 2) U.S. residents living and working in the U.S. were not required to pay income tax.

Holy Cow!

Unfortunately, not only will this crazy out of control tax preparer suffer from this train wreck but so will her clients. They are now responsible for paying the additional taxes and associated penalties and interest that resulted from the audits of their returns. And at least one client had to barrow against their house to pay the debt to the IRS.

Former IRS Secretary Files Fraudulent Returns and Pockets Taxpayers Refunds

By Stacie Clifford Kitts, CPA

Here is another one for the “Stupid Preparer” files.

What do you really know about your tax return preparer?

If you hired Debra Windham of Chicago a former secretary with the IRS Criminal Investigative Division, your tax return might have been involved in a tax fraud scheme that resulted in a loss to the government of approximately $850,000. The government has filed suit seeking a permanent injunction against Ms. Wildham.

According to the complaint, Ms. Windham allegedly prepared tax returns for clients claiming bogus deductions and then applied for refund anticipation loans in her client’s name without their consent. In addition, as part of her scheme, she allegedly prepared two sets of returns, one she presented to her client and another return claiming the fraudulent deductions that she filed with the IRS. Ms. Windham then pocketed the additional refunds claimed on the returns.

Stupid Tax Preparers Cause Problems for Their Clients

By Stacie Clifford Kitts

I’m always interested in reading about the latest tax scams. And no matter how many I read about, I am always amazed at how some tax preparers and their clients are willing to face jail time and crippling fines in order to evade paying income tax.

For me, reading press releases from the Department of Justice is like watching a tax preparation train wreck. The blatant stupidity of some preparers is genuinely mind numbing.

A recent favorite concerns a Connecticut woman who took over her father’s tax practice following his incarceration. According to the information I found on Findlaw.com , it looks like daddy was producing counterfeit checks from his place of business. The same business where he was also preparing bogus tax returns.

I can’t help but wonder what she told her father’s clients that persuaded them to stick around. Ummmm sorry my dad’s in jail – but no worries, I can still prepare tax returns for you….. Nor can I understand the mentality of someone who after watching her father go to jail would decide that taking over any business of his was a good idea. Hello – wake up.

Not surprisingly, after her father’s incarceration, the IRS started a tax preparer investigation where the IRS audited over 600 returns she and her father prepared. As a result of the investigation, this woman decided it would be a good idea to file amended returns for all her clients moving the bogus deductions that had apparently been claimed on the returns from Schedule C to Schedule A. Ummmm, bogus is bogus no matter what schedule they’re on. Dah. Did she think this would confuse the IRS into giving up?

But then her behavior gets even more bizarre when she informs her clients that the IRS does not have the authority to conduct examinations of Connecticut resident’s tax returns. Okay, what is so special about Connecticut? And if you’re wondering – yes – the IRS has jurisdiction in Connecticut and in all the other US states and districts and territories.

She also told her clients that since the clients lived in the US and not a foreign country they were not subject to US income tax. Then she proceeded to mail letters to the IRS stating this frivolous position. Yikees! Okay, let me clear this up. If you live in the US, and sometimes even when you don’t, and you are making money or your business is profitable, you are subject to income tax.

Unfortunately, it’s not just the crazy out of control tax preparer who will suffer from this train wreck. Her clients are now responsible for paying the additional taxes and associated penalties and interest that resulted from the audits of their returns. And at least one client had to barrow against their house to pay the debt to the IRS.

Federal Court Bars Ohio Accountant from Selling Oil and Gas Tax Scheme (August 4, 2008)
Statement of Deputy Assistant Attorney General John A. DiCicco on the Decision in Stobie Creek Investments, LLC v. United States (August 1, 2008)
Founders and Principals of Global Prosperity Sentenced for Tax Crimes (July 29, 2008)
U.S. Seeks to Permanently Bar Orlando, Fla., Tax Return Operation (July 22, 2008)
Federal Court Bars Southern Californian from Promoting Payroll & Trust Tax Schemes (July 21, 2008)
District of Columbia Tax Preparer Sentenced to Jail for Conspiracy (July 17, 2008)
Former Chief Financial Officer of Catholic Diocese of Cleveland Convicted of Conspiracy & Filing False Tax Returns (July 3, 2008)
Federal Judge Approves IRS Summons for UBS Swiss Bank Account Records (July 1, 2008)
Justice Department Asks Court to Serve IRS Summons for UBS Swiss Bank Account Records (June 30, 2008)
Justice Department Seeks to Shut Down Dallas Tax Preparer (June 24, 2008)
Banker Pleads Guilty to Helping American Real Estate Developer Evade Income Tax on $200 Million (June 19, 2008)
Statement of Assistant Attorney General Nathan J. Hochman on the Decision in Texaco Inc. v. United States (June 17, 2008)
Connecticut Woman Barred from Preparing Federal Tax Returns for Others & from Promoting Tax Fraud Schemes (June 6, 2008)
Court Bars Houston Area Woman from Preparing Tax Returns (June 4, 2008)
Former Skydiving Company Owner and Ex-Houston Auto Executive Convicted of Tax Charges (June 3, 2008)
Federal Court Permanently Bars Massachusetts Man from Preparing Federal Income Tax Returns (June 2, 2008)
Federal Court Shuts Down Washington State Bogus “Decoding” Tax Scheme (May 30, 2008)
Ohio Judge Rejects Tax Claims on $423 Million Alleged Purchase of German Facility Made by Cleveland & Pittsburgh-Based Banks (May 30, 2008)
Federal Court in Dallas Bars Woman from Preparing Tax Returns for Others (May 21, 2008)
Hawaii Federal Court Bars Alleged Tax Fraud Scheme (May 20, 2008)
Wyoming Firearms Dealer Convicted of Tax Evasion and Harassment of Federal Officials (May 19, 2008)
Metropolitan Police Detective Turned Tax Defier Convicted of Tax Fraud (May 19, 2008)
Federal Court Enjoins Nationwide Tax Scheme Promoters (May 16, 2008)
North Carolina Federal Court Shuts Down Alleged Tax Preparation Scam (May 16, 2008)
Court Rules Against Tax Shelter Promoter Gary Kornman Opionion Says Scheme was Like Attempt to Change “Lead into Gold” (May 13, 2008)
Federal Court Bars Northern Virginia CPA from Preparing Federal Tax Returns (May 13, 2008)
Federal Court Issues Temporary Restraining Order Against Hartford, Connecticut Tax Return Preparer (May 7, 2008)
Financial Planner Sentenced to Prison for Conspiracy in Offshore Insurance Tax Scam that Cost U.S. More Than $2.2 Million (May 2, 2008)
Justice Department Sues to Stop Alleged Illinois Tax Scam Involving More Than $12 Million (May 2, 2008)
Ex-Owner & Former In-House Counsel of Cincinnati Company Found Guilty of Tax Fraud Conspiracy & Tax Crimes (May 1, 2008)
District of Columbia Tax Preparer Pleads Guilty to Conspiracy (April 30, 2008)
Statement of Assistant Attorney General Nathan J. Hochman on Today’s Decision in BB&T Corporation v. United States (April 29, 2008)
Federal Judge Holds Notorious Tax Defier in Contempt of Court (April 29, 2008)
Ohio Jury Finds Cincinnati-Based Bank Not Entitled to $5.6 Million Tax Refund (April 21, 2008)
California Man Convicted on Federal Tax Fraud Charges for Fraudulent Tax Preparation Scheme (April 18, 2008)
Michigan Attorney and Client Plead Guilty to Tax Crimes in Connection with a Fraudulent Insurance Tax Shelter (April 16, 2008)
Federal Court Bars Oregon Family and Associate from Promoting Tax Fraud Scheme (April 11, 2008)
Federal Court Permanently Bars Michigan Man from Preparing Tax Returns (April 11, 2008)
Transcript of Nathan J. Hochman, Tax Division’s Assistant Attorney General Announcing Creation of the National Tax Defier Initiative (April 9, 2008)
Justice Department Files Injunction Suits in Nationwide Crackdown on Alleged Tax Defier Scheme Promoters (April 8, 2008)
Statement of Nathan J. Hochman, Tax Division’s Assistant Attorney General Announcing Creation of the National Tax Defier Initiative (April 8, 2008)
Assistant Attorney General Nathan J. Hochman to Hold News Conference Regarding New Tax Defier Initiative (April 7, 2008)
Complaint for Permanent Injunction Against Eugene “Gino” Casternovia, etc., et al. (April 7, 2008)
Complaint for Permanent Injunction Against Sharon Diane Kukhahn, etc. (April 7, 2008)
Complaint for Permanent Injunction Against Pinnacle Quest International, et al. (April 7, 2008)
Federal Court in Seattle Permanently Shuts Down “Warehouse Bank” Tax Defier Operation with $28 Million in Deposits Over Four Years (April 3, 2008)
Statement of John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division on the Decision in Enbridge Energy v. United States (April 1, 2008)
Imprisoned Missouri Tax Preparer Permanently Barred from Preparing Federal Tax Returns (March 31, 2008)
Federal Court Bars Hialeah, Florida Woman from Preparing Tax Returns for Others (March 28, 2008)
Fresno Man Barred from Promoting Tax Scheme (March 28, 2008)
Federal Court Dismisses Multi-Billion Dollar Telephone Excise Tax Cases (March 26, 2008)
Federal Court Bars Arizona Couple from Selling “Corporation Sole” Tax Scheme (March 25, 2008)
Justice Department Seeks to Bar Massachusetts Resident from Preparing Federal Tax Returns for Others (March 13, 2008)
Justice Department Seeks to Bar Illinois Tax Preparer from Preparing Federal Tax Returns for Others (March 12, 2008)
D.C. Grocery Owner Pleads Guilty to Tax Crimes Involving Over $500,000 in Unpaid Payroll & Sales Taxes (March 10, 2008)
Michigan Attorney and Client Charged with Tax Crimes Along with Four Promoters of Fraudulent Insurance Tax Shelter (March 7, 2008)
Justice Department Asks Federal Court to Bar Mississippi Woman from Preparing Tax Returns for Others (March 6, 2008)
Cheyenne Firearms Dealer Convicted of Tax Evasion and Harassment of Federal Officials (March 5, 2008)
Federal Court Permanently Bars Michigan Man from Preparing Tax Returns for Others (March 3, 2008)
Kansas-Based Tax Scheme Promoter Convicted in $78 Million Fraud (February 28, 2008)
Federal Court Bars San Diego Man from Preparing Tax Returns (February 26, 2008)
U.S. Sues Two Men to Block Alleged Tax Fraud Schemes Said to have Cost U.S. Treasury Hundreds of Millions (February 21, 2008)
Tax Preparers from Washington, D.C. & Texas Sued for Allegedly Promoting Gold Mining Tax Scam (February 21, 2008)
Dallas Area Man Barred by Court from Operating Tax Service (February 13, 2008)
Salt Lake City Jury Convicts Attorney in $20 Million Tax Fraud Conspiracy (February 13, 2008)
U.S. Sues to Bar St. Louis CPA and Son from Preparing Tax Returns for Others (February 11, 2008)
Court Bars Memphis Woman from Preparing Tax Returns for Others (February 8, 2008)
Texas Man Barred from Promoting Tax Fraud Schemes (February 8, 2008)
Federal Court Bars Charlotte Man from Preparing Tax Returns (January 25, 2008)
Three Defendants Plead Guilty in $20 Million Tax Fraud Conspiracy (January 24, 2008)
U.S. Court is Asked to Bar Dallas Firm from Preparing Tax Returns for Others (January 23, 2008)
Justice Department Seeks to Bar Two Connecticut Residents from Preparing Federal Tax Returns for Others (January 18, 2008)
Federal Court Bars Illinois Man from Promoting Fraudulent Tax Scam (January 11, 2008)
U.S. Court Bars St. Louis Man from Preparing Tax Returns for Others (January 8, 2008)

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