IRS "Dirty Dozen" Tax Scams

Scams put taxpayers at risk.

Consumers can help protect themselves by choosing a reputable tax preparer.

Phishing: Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information.

Phone Scams: Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things.

Identity Theft: Taxpayers should be alert to tactics aimed at stealing their identities, not just during the tax filing season, but all year long. The IRS, working in conjunction with the Security Summit partnership of state tax agencies and the tax industry, has made major improvements in detecting tax return related identity theft during the last several years. But the agency reminds taxpayers that they can help in preventing this crime. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else’s Social Security number.

Return Preparer Fraud: Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuate refund fraud, identity theft and other scams that hurt taxpayers.

Inflated Refund Claims: Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high.

Inflated Refund Claims: Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high.

Falsely Padding Deductions on Returns: Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions, such as charitable contributions and business expenses, or improperly claiming credits, such as the Earned Income Tax Credit or Child Tax Credit.

Fake Charities: Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations.

Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities or satisfy the requirements related to qualified research expenses.

Offshore Tax Avoidance: Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities.

Frivolous Tax Arguments: Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000.

Abusive Tax Shelters: Abusive tax structures including trusts and syndicated conservation easements are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered.

IRS

An 8 Hour, $100 CPA CPE with George Hartzman in Greensboro, on August19, 2010

You are cordially invited to an Eight Hour,
Intermediate / Advanced CPA CPE Workshop entitled:
 

What Could Happen
After What May Happen Next 

Critical analysis and debate for CPAs
in public accounting and industry.
 

Topics: An overview of current geopolitical and economic events, North Carolina and local municipal budget and finance highlights, America and the States, Bailout, Greece, Europe, Social Security, The 2009 Financial Report of the U.S. Government, Federal Reserve, FASB, Healthcare Ethics, Tax Ethics, Business and Regulatory Ethics, Hedge and High Frequency Trading
 

Think Professional Education is registered with the North Carolina State Board of CPA Examiners as a sponsor of continuing professional education. Please note that these sessions do not satisfy the annual ethics requirements for North Carolina CPAs.
 

George Hartzman, President of Think Professional Education specializes in economics and financial ethics and has taught North Carolina CPA CPE for ten years. George is the author of Think, What to Do Now, Think, Investor Guide, Think Retirement Plan Edition, Fiduciary Guide, Questions for Investors and Questions for America, which are used to teach CPE and adult education.
 

Each Attendee with recieve a dated, numbered, and signed copy of What Could Happen After What May Happen Next

Mr. Hartzman has worked in the financial services industry as a financial advisor and portfolio manager and holds degrees in Communications, Philosophy and Public Relations from Frostburg State University.

Lunch and refreshments catered by Lox, Stock and Bagel

Seating limited to 30 attendees 

Lecture Format. No advanced preparation or prerequisites necessary. Complaints or comments regarding registered sponsors may be addressed to the North Carolina State Board of CPA Examiners, PO Box 12827, Raleigh, NC 27605. Each CPA must exercise judgment in selecting courses and claiming credit for only those courses that contribute to the CPA’s professional competence and meet the standards  found in 21 NCAC 8G .0400 Based on 50 minute hours

Please click button to register in the left column.

If Bill Gates and Warren Buffett make about 5% on dividends and 5% oncapital gains on about $100 billion, did they stop by the White Houseto thank Obama for giving them what could be an extra $1,477,351,600over 2 years, by charging America’s children about $1,600 a piece?

President Obama met with Bill and Melinda Gates and Warren Buffett
in the Oval Office this morning.

...During the visit, they also discussed ideas for growing the economy
and making America more competitive including investment in education
to better prepare the next generation
and investing in innovative areas with opportunity for growth.

USA Today

If Bill Gates and Warren Buffett are worth about $100 billion,
and make about $10 billion per year between long term capitol gaines and dividend interest
could they save about $1,477,351,600 over two years if Obama’s Tax Deal passes?

…….……………………….…………..…Tax Cuts Extended…………….Tax Cuts Expired

Dividends and LT Capital Gains………..$10,000,000,000…………………$10,000,000,000?

Tax Liability……………………………….…..$749,741,250 ……….$1,488,417,050?

Average Tax Rate………………………………..14.99%…………………..……. 29.77%?

$749,741,250 – $1,488,417,050 = about $738,675,800 x 2 years = about $1,477,351,600?

Tax Plan: Tax Cuts Extended vs. Tax Cuts Expired    
Tax Year:  2011
AMT Patch:  AMT Patch in effect

Tax Calculator

 

If about 1,699,000 US households make more than $250,000,
and their portion of the tax cuts cost $120 billion
are America’s elected leaders
about to charge everyone’s kids $1,600 each
to give Bill Gates and Warren Buffett about $1,477 billion?

$120,000,000,000 / 75,000,000 Kids = $1,600 per American Child?

Hartzman versus Wells Fargo Advisors, Part One, including some emails from Rolling Stone's Matt Taibbi





I also believe "12 U.S.C.A. §5567 Consumer Financial Protection Act of 2010 (CFPA), Section 1057 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010" is also applicable to portions of this case.

 

It appears "The American Recovery and Reinvestment Act of 2009" (ARRA) may also apply.

I believe money is fungible

Fungible means interchangeable.

The word comes into play
when (inter alia) earmarked funds end up in a general account.

These funds are then free to be used for purposes other than intended.

Example: You would like to go on a vacation but you have unpaid car repair bills.

A wealthy uncle hears that you are having financial trouble and sends money to help.

However, he would never have agree to pay for your vacation
–- he’s nice, but not that nice.

Once your uncle’s money is deposited into your checking account,
you are free to spend it as you please.

You then get to pay off your bills and go on vacation.

In essence, you paid your bills (a necessity) while your uncle funded your vacation.

http://blog.mises.org/archives/007321.asp#

Fungibility

Fungibility is the property of a good or a commodity

whose individual units are capable of mutual substitution.

Examples of highly fungible commodities [like oil] 

are ...currencies.

It refers only to the ease of exchanging one unit of a commodity

with another unit of the same commodity.

Wikipedia

http://en.wikipedia.org/wiki/Fungibility

Word for the day: Fungible

Mark Pittman (October 25, 1957 - November 25, 2009) was a financial journalist covering corporate finance and derivative markets.

CFA Asset Manager Code of Professional Conduct: General Principles of Conduct

Can truth be a casualty of social instability?

Those who do not accept the fundamental principles of state propaganda

are simply excluded from the debate

(or if noticed, dismissed as "emotional," "irresponsible," etc…)

Noam Chomsky

If a few multinational corporations
own an overwhelming majority of newspapers, magazines, news channels
radio stations, book publishers and business information sources,
what are the chances of an investigative journalist
publishing a negative story on a sister subsidiary
or on a subsidiary of another company that could retaliate in kind,
or on a whistleblower against the top brass
of the fourth largest bank in the country?

Is it worse that America’s political leadership didn’t see the financial crisis coming,
or that most economists and business leaders didn’t know
or did and failed to inform the public,
or that some legislators sharing relatively high portions of blame,
pledged to find and punish those responsible and did relatively nothing
as the regulatory infrastructure of the country became compromised?

It is difficult to get a man to understand something

when his salary depends on his not understanding it

Upton Sinclair

Is an untruth disseminated as true a lie

if the truth remains unfound through in-curiosity?

If budget deficits were a dominant 2010 campaign issue, why did congress pass and the president sign a $900 billion bigger deficit about a month later?

Sometimes people mistake the way I talk

for what I am thinking.

Idi Amin

If Michael Bloomberg made 5% per year on $20 billion, and paid half his taxes on long term capital gaines and half on dividend interest, will he "earn" an extra $295 million over the two years with Obama’s Tax Deal?

"President Barack Obama should tell Democrats angered by his compromises with Republicans

on extending tax cuts to “suck it up,” New York City Mayor Michael Bloomberg said.

“He says, ‘Look, this is what I did, this is the best I can do. Suck it up,’” Bloomberg said,

when asked how Obama should deal with Democrats angered by the tax measure

and other compromises with Republicans."

Molly Peterson and Gopal Ratnam

If Michael Bloomberg is worth about $20 billion,
and makes about $1 billion per year on long term capitol gaines and dividend interest
could he save about $295,470,320 over two years if Obama’s Tax Deal passes?

.......…………….............…………..…Tax Cuts Extended…………….Tax Cuts Expired

Dividends and LT Capital Gains...........$1,000,000,000…………………$1,000,000,000?

Tax Liability…………………................…..$149,948,250 ………………….$297,683,410?

Average Tax Rate………........................…..14.99%……………….....……. 29.77%?

$297,683,410 – $149,948,250 = about $147,735,160 x 2 years
= about $295,470,320?

Accountability

"Saying it's not your fault you crashed the ship into the rock
because the rock was underwater and hidden
nobody could have seen it coming loses its force
when you are navigating in waters that are known to be rocky.

Even if you have the latest sonar based upon fancy, innovative math
that is supposed to detect the rock before you hit it
and even if regulators were supposed to clearly map and mark all danger
if you hit it anyway,
there's a reason why captains are expected to go down with
or at best be the last ones off – the ship.

It ensures they'll do all they can to avoid hitting it in the first place."

Mark Thoma
The Professionals are not being Held Accountable
Economists View

Don’t say you can if you can’t, say you’re going to and not,

be a very good bad example, think you know what you don’t,

do what you don’t understand,

sacrifice future unhappiness for an unnecessarily pleasant present,

underestimate irrationality, offend many to benefit few,

and not hold yourself and others accountable.

"Academic Economists to Consider Ethics Code"

"When the Stanford business professor Darrell Duffie co-wrote a book on how to overhaul Wall Street regulations, he did not mention that he sits on the board of Moody’s, the credit rating agency.

As a commentator on the economy, Laura D’Andrea Tyson, a former adviser to President Bill Clinton who teaches in the business school at the University of California, Berkeley, does not usually say that she is a director of Morgan Stanley.

And the faculty Web page of Richard H. Clarida, a Columbia professor who was a Treasury official under President George W. Bush, omits that he is an executive vice president at Pimco, the giant bond fund manager.

...leaders of the American Economic Association, the world’s largest professional society for economists, founded in 1885, are considering a step that most other professions took a long time ago — adopting a code of ethical standards.

...Should economists be required merely to disclose who finances their research, as many academic journals already require?

Should they have to reveal which corporate clients they advise, consult for or give speeches to?

Should they even be allowed to serve as corporate directors and officers, as many business and finance professors do?

...Since economics emerged as a modern discipline in the late 19th century, its practitioners have resisted formal ethical codes...

...“Certainly the implication ...was that people were selling their academic reputations to further the interests of moneyed individuals and institutions.”

...many financial economists who weighed in on the Wall Street overhaul signed into law in July did not prominently disclose potential conflicts of interest."

SEWELL CHAN

MF Global: Accounting and Auditing Ethics

"Six months ago the accounting firm...said MF... and its units “maintained, in all material respects,
effective internal control over financial reporting as of March 31, 2011.”

MF...filed for bankruptcy on Oct. 31.

This week the trustee ...said as much as $1.2 billion of customer money is missing, maybe more.

Those deposits should have been kept segregated from the company’s funds.

By all indications, they weren’t.

What’s the point of having auditors do reports like this?

And are they worth the cost?

...When an auditor certifies that a client’s internal controls are effective,
that’s supposed to mean the company can do basic functions like maintain accurate financial records,
detect unauthorized transactions and keep track of its receipts and expenditures.

...“Their books are a disaster,” Scott O’Malia, a commissioner at the Commodity Futures Trading Commission,
told ...an interview two weeks ago.

...to believe...got it right when it blessed MF’s controls in May,
you would have to accept the notion that MF’s controls were effective in March
-- and didn’t start going bad until sometime later.

...this scenario seems implausible.

...whenever a financial institution fails, it’s almost always true that its internal controls were poor
-- and had been that way for a long time.

Otherwise it wouldn’t have failed.

...other companies that use...’s New York office as their auditor include...and...

Both ...presumably are too big to fail,
meaning taxpayers would be on the hook if they ever blew up.

A Pricewaterhouse spokesman, Caroline Nolan, declined to comment on the firm’s work for MF.

If...can’t spot control weaknesses at a relatively small shop like MF
...it’s a bit much to expect that the firm would catch anything materially amiss at...
which has $949 billion of assets, or at ...with $2.3 trillion...

The reason MF had to get an outside audit report on its internal controls
was that the Sarbanes-Oxley Act required it.

That law was enacted in 2002 in response to a wave of audit failures
at big companies such as WorldCom Inc. and Enron Corp.

...For a while, it looked like the new rules were working.

Then a backlash hit.

Corporate executives, lawmakers and even Securities and Exchange Commission officials
complained that the auditors were being too strict.

The number of restatements plunged.

...Many companies’ audit fees plunged, suggesting that the auditors there were doing less work.

For fiscal 2007, MF Global paid...$17.1 million in audit fees.

By fiscal 2011, that had fallen to $10.9 million, ven is warning signs about MF’s internal controls
were surfacing publicly.

On top of that...’s main regulator, the Public Company Accounting Oversight Board,
released a nasty report this week on the firm’s audit performance.

The agency cited deficiencies in 28 audits, out of 75 that it inspected last year.

The tally included 13 clients where the board said the firm had botched its internal-control audits.

...The point of having a report by an independent auditor
is to assure the public that what a company says is true.

Yet if the reports aren’t reliable, they’re worse than worthless,
because they sucker the public with false promises."

Jonathan

On Oil Production, Consumption and Light Sweet and Heavy Sour Crude

Before we started using it, there was about 76 cubic miles of oil on Earth,
or a sphere with a diameter of 5.26 miles, about as tall as the tallest mountain on Earth,
of which since 1859, we have consumed about half.

If Earth’s diameter is about 7,960 miles and the diameter of all the oil is about 5.26 miles,
and about half of it is gone, is less than ½ of 1% of Earth is made of oil?

In 2000, the difference between non-OPEC light sweet and sour crude oil production of 66 mb/d
was 41% light sweet and 59% sour.

mb/d = million barrels per day

From 2000 to 2004, non-OPEC light sweet production fell 3.26 mb/d, from 27.06 mb/d to 23.8 mb/d.

34% to 67%, light sweet to sour.
3. Oil producing nations export petroleum products only after domestic needs are met.

A ‘2000’ nation producing 5 mb/d, consuming 1.0 mb/d of light sweet can export 1.05 mb/d of light sweet. (41% light sweet production)

If a ‘2004’ nation’s total oil production increased 6% to 5.3 mb/d, like non-OPEC production above,
and total light sweet production dropped to 34% while domestic consumption rose to 1.1 mb/d,
then light sweet exports fell about 33.3%, to 0.7 mb/d.

If between 2000 and 2004, non-OPEC lost 3.26 mb/d as OPEC added 1 mb/d of light sweet,
did total global light sweet production fall to about 2.26 mb/d?
If total oil production rises or stays the same
while light sweet production falls while consumption rises in oil producing nations
and China and India…?

Updated: "The ACC Hall of Champions has hosted 6,456 visitors since its opening in March 2011."

Monte Carlo

… a "Monte Carlo" simulation, commonly used in financial planning

estimates the odds of reaching retirement financial goals.

 

Though these tools typically run through hundreds or thousands of potential market scenarios,

they often assign minuscule odds to extreme market events.

 

Yet these extreme events seem to be happening more often.

 

If causes, actions or winners have effects, reactions or losers

and A is caused, allowed, accelerated, held back or prevented

is it better to pre-think what could happen to B, C and D

than not?

 

The questions about Monte Carlo tools

reflect broader concerns about mathematical models

for gauging portfolio risks

 

These models were supposed to help quantify and manage the risks

of...complex instruments

 

If achievement takes less time with a rational plan

can you get farther faster than those without

and vice versa?

 

But given the events of the past couple of years

it appears that the models often gave big institutions

as well as small investors, a false sense of security

 

Critics emphasize that the problem isn't Monte Carlo itself

but the assumptions that go into it

 

If some financial estimates and hypothetical illustrations

assume perpetual levels of varying data

can probability be manipulated?

 

Is the present you the only who

who’s going to care for the future you?

 

 

Since no standard approach exists

one user might plug in a range of assumptions on interest rates

inflation or volatility that is different from another user

 

Some industry participants and academics

are pushing for Monte Carlo tools to more clearly illustrate

the scarier scenarios

 

Eleanor Laise

The Wall Street Journal, May 2, 2009

 

If there are at least 15,000 professional American Economists

and less than 1% foresaw the financial crisis

and many mathematical based financial prognostications

were relatively useless

which if left in place

could negatively affecting the future

should some try to fix what’s probably broken?

On Peak Oil: Could long term economic recovery be limited to available and/or affordable energy supplies?

Branson warns that oil crunch: Energy crisis threatens to be more serious than credit crunch

Sir Richard Branson and fellow leading businessmen will warn ministers this week that the world is running out of oil and faces an oil crunch within five years.

…Other British executives who will support the warning include Ian Marchant, chief executive of Scottish and Southern Energy group, and Brian Souter, chief executive of transport operator Stagecoach.

Their call for urgent government action comes amid a wider debate on the issue and follows allegations by insiders at the International Energy Agency that the organization had deliberately underplayed the threat of so-called "peak oil" to avoid panic on the stock markets.

…The issue came up at the recent World Economic Forum in Davos where Thierry Desmarest, chief executive of the Total oil company in France, also broke ranks. The world could struggle to produce more than 95m barrels of oil a day in future, he said – 10% above present levels. "The problem of peak oil remains."

Chris Skrebowski, an independent oil consultant who prepared parts of the peak oil report for Branson and others, said that only recession is holding back a crisis…Skrebowski believes that Britain is particularly vulnerable because it has gone from being a net exporter of oil, gas and coal to being an importer, and is becoming increasingly exposed to competition for supplies.

The question of peak oil came to centre stage last November when a whistleblower told the Guardian the figures provided by the IEA – and used by the UK and US governments for much of their planning scenarios – were inaccurate.

"The IEA in 2005 was predicting that oil supplies could rise as high as 120m barrels a day by 2030, although it was forced to reduce this gradually to 116m and then 105m last year," said the IEA source. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this."

Terry Macalister
guardian.co.uk

Could some who follow statistical irregularities, take advantage of relative unawareness of the many, prior to collective realization?

There’s been some suggestions that the payrolls report

had been distorted by the way the Bureau of Labor Statistics

accounts for business births and deaths

 

There’s been talk that the birth/death model

 a little-noted detail in the monthly report

 came in with a huge statistical discrepancy for this month

 effectively adding as many as 220,000 jobs to the reading

 

In a conference call with reporters, Labor Secretary Hilda Solis

...insisted the BLS number was correct

 and that no changes would be needed

 

Market Reaction Hints At False Note In Jobs Report

Bob O'Brien

Barrons, June 5, 2009

  

 

 

What is the likelihood

that the Bureau of Labor Statistics Birth/Death adjustment

which guesstimates employment at new businesses

added 220,000 hypothetical jobs in May 2009

including 43,000 new construction positions

as new small business loan availability cratered

77,000 in Leisure and Hospitality jobs

as hotel occupancy hit new lows

and 7,000 Financial Services positions

 

if 174,000 jobs were estimated in May 2008?

   

Is it conceivable

that the US created more construction and leisure/hospitality jobs

in April and May of 2009

than in April & May of 2002, 3, 4, 5, 6, 7 and 2008

considering current economic circumstances?

 

 

If borrowing to pay for tax cuts helps an economy in the short run, do unpaid for tax cuts retard growth in the long run?

The Laffer Curve, anyone know what this says?

 

It says that at this point on the revenue curve

you will get exactly the same amount of revenue as at this point…

 

Does anyone know what Vice President Bush called this in 1980, anyone?

 

Something-d-o-o economics, voodoo economics.

 

Ferris Bueller’s Day Off

 

Should higher interest rates and inflation

correlated to tax cuts and increased borrowing

eventually reduce tax revenue

following short term economic growth?

Geo-Politics and business is Zugzwang

Zugzwang…describes a situation where one player is put at a disadvantage because he has to make a move – the player would prefer to pass and make no move. The fact that the player must make a move means that his position will be significantly weaker than the hypothetical one in which it is his opponent's turn to move.

A player whose turn it is to move who has no move that does not worsen their position is said to be in zugzwang.

In a chess endgame, being in zugzwang usually means going from a drawn position to a loss or a won position to a draw, but it can be from a win to a loss, or a substantial loss of material which probably affects the outcome of the game.

Zugzwang
Wikipedia

I have studied the enemy all my life
 
I have read the memoirs of his generals and his leaders

I have even read his philosophers…

I have studied in detail the account of every damned one of his battles

I know exactly how he will react under any given set of circumstances
and he hasn’t the slightest idea of what I’m going to do

So when the time comes, I’m going to whip the hell out of him

George S Patton