and two steps to protect taxpayers.
by 卡塔尔世界杯常规比赛时间 research
in case you haven’t noticed, the world has no shortage of scammers. if don’t believe it, check your email inbox and spam folder. count the nigerian widows, the miracle pills, the fake invoices, the contests you’ve won and all the other attempts to rob you.
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one of the most painful scams is the shyster tax practitioner. innocent, well intentioned taxpayers come looking for help only to find themselves paying a fee to be tossed into the labyrinthine hell of the irs bureaucracy.
no federal standards
the irs does what it can – well, some of what it can – to prevent tax-related scams, but the underfunded, understaffed, underequipped agency barely begins to defend the american taxpayer from thievery coming in from all corners of the world.
it’s most ironic – and painful – that a big part of the international scam gang is an integral part of the american tax system – the tax preparers who are all but essential for fair and compliant income tax filings.
part of the problem is that the thousands of pages of tax code, and tens of thousands of pages of legal opinion, are indecipherable to the average taxpayer. for most people, anything more complicated than a 1040-ez is going to require professional help.
trouble is, despite the thousands of dollars involved in a given tax return, there are no federal standards for tax preparers. no competency exams. no background checks. no oversight. no certification. and no accountability.
that crucial interface between the taxpayer and the tax agency is a wide-open door for fraud.
in no uncertain terms, the taxpayer advocacy service has informed congress that “the lack of regulation allows unscrupulous and unqualified individuals to prepare tax returns for a fee with no minimum qualifications. this puts taxpayers at significant risk.”
a big problem
the tas’s annual report to congress says, “non-credentialed preparers, often operating with little to no training or accountability, can easily fall into the role as scam facilitators. they promise big refunds, exploit non-existent loopholes, and misrepresent credits and deductions to lure clients and earn fees. when the irs selects these returns for further scrutiny due to error or fraud, it is the taxpayer, not the preparer, who faces audits, penalties and legal consequences.”
ouch, right? the taxpayer pays a fee for the preparation, then gets penalized for noncompliance.
this is a big problem. the tas finds that 61 percent of unique preparer tax identification numbers reported on ty2023 returns were non-credentialed preparers and not subject to any minimum standards.
so when one of these suit-and-tie scammers tells a taxpayer they can file form 7202, credits for sick leave and family leave for certain self-employed individuals, for a hefty return, the taxpayer isn’t likely to read and understand the explanation behind the form.
consequently, while non-credentialed preparers were responsible for 83 percent of returns filing a 7202, they accounted for 98 percent of the credits that were disallowed by irs examination.
and then what happens?
- the irs flags the return as suspicious.
- the requested return – the whole return, not just the questionable part – is frozen.
- the irs offers little or no explanation of the problem or what to do about it.
- the taxpayer must verify their identity before the irs even “posts” the return for processing. average delay before posting is 126 days.
- taxpayers who file an amended return to correct the problem wait an additional average of 200 days until their refund is unfrozen.
- taxpayers who don’t file an amended return wait an average of 415 days for the irs to inform them that the agency is opening an audit. until that point, they may have no idea why they are being audited.
- somewhere in this year-and-a-half process the unscrupulous tax preparer has left town in search of new victims.
the double ouch
the double ouch is that the taxpayers most likely to rely on a sleazy tax preparer are financially stressed low-income workers who can least afford to wait a year or more for a refund. they’re also least likely to understand what they have to do to straighten things out.
the nta says the irs needs to do two things:
- establish a centralized office to prevent scams and to help scam victims.
- establish a practitioner competency, credential and registration system to make it harder for scam practitioners to operate.
with a little support from congress, the irs could make this big step toward preserving the crucial link between taxpayers and the tax collector.