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Who We Are Our mission at CFED is to make it possible for millions of people to achieve financial security and contribute to an opportunity economy.
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.
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Introduction to Fraud.org Presented by: John Breyault Vice President, Public Policy, Telecommunications, and Fraud
What Are We Going to Talk About? ● Who is NCL? ● What is Fraud.org? ● How do we handle consumer complaints? ● How do we analyze complaint trends? ● How can you get involved?
Who Is NCL? 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
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
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 25
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 26
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 27
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 28
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 29
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 30 Atlanta, GA 30308
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 31
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 32
Return Preparer Fraud Criminal Perspective Senior Analyst Eulonda Lea IRS Criminal Investigation Office of Refund Crimes
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 insufficient to cover claimed expenses • Claiming false dependents • Inflated itemized deductions including: charitable contributions, medical or dental expenses • Claiming tax credits based on false income/expenses • False business expenses created to offset income
Scheme Development Centers • 8 SDCs • Andover • Atlanta • Austin • Cincinnati • Fresno • Kansas City • Ogden • Memphis
How IRS-CI Identifies Fraud • Scheme Development Centers – Financial Forensics Tools • Referrals/Complaints from the Return Preparer Office • Public and Other Law Enforcement Tips • Referrals from Civil Counterparts • Special Agent Observation
Return Preparer Fraud Investigative Steps • Review and Analyze Client Returns • Surveillance • Law Enforcement Database Checks • Public Database Checks • Undercover shopping (best evidence) • Interview Clients (Witnesses)
Return Preparer Fraud Investigative Steps (Cont.) • Request Audits of Client Returns • Search Warrant • Prepare and Submit Special Agent Report Recommending Prosecution to DOJ-Tax • Assist U.S. Attorney assigned to Prosecute • Testify at Criminal Trial
Criminal Violations • Title 26 USC Section 7206(2) - Aiding in the Preparation of a False Return • 18 USC 286 – Conspiracy to File False Claims (Tax-related) • 18 USC 287 – Filing False Claims (Tax-related) • 18 USC 641 - Theft of Government Funds • 18 USC 510 – Treasury Check Charge • 18 USC 1029 – Access Device Fraud • 18 USC 1708 – Mail Theft • 18 USC 1028 – Identity Theft
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