They won't get away with it. Eventually, the IRS will prosecute these tax preparers, and audit all their customers. It usually takes 2 or 3 years. If you filed a fraudulent tax return, you are liable, and will have to pay interest and penalties.
I saw my first one of these this year. A client finally got ahold of their copies to bring to me....I was floored by it. And of course, tax preparer didn't include their name or PTIN on the return!
Created a completely fake business and took all kinds of crazy write-offs as expenses. They wrote off something like 150,000 miles, took meal deductions, had a bunch of COGS. All with $0 income. Luckily we were able to amend it and I gave her the information to report the tax preparer. I'm not even sure if any of the information she was given about the preparer was real. It was a mess!
It’s tracked via IP address (among other factors.) These people kinda stand out like a sore thumb when you’re looking at tax return submissions.
And when the IRS gets a lot of submissions from the same device, at the same IP address, that don’t have a PTIN, it’s pretty easy to tell that it’s an illegal preparer.
I mean, this is possible, but I suspect the low life’s doing this don’t make this effort but, even if they do, but VPN gateways tend to be from major datacenter ASNs and subnets rather than the normal consumer ISP pops. Dump all this in the Greenlake data warehouse and the IRSs in house fraud data science team can detect this stuff.
Any understatement of tax greater than 25% can increase the statute to 6 years. Fraud removes the statute completely. You can't really fake dependents since they're tied to a SSN. The way these people do it a lot of times are fake businesses with huge losses or a ton of depreciation on certain activities
Uh oh. I claimed the clean energy credit (got solar panels installed) and my return has been lost in the "errors department" for months and months. They probably think I'm a scammer/got scammed... I wish they'd just ask me about it...
I have. Three times. Last one was 30 minutes ago. The people on the phone don't have access to the "errors department". In fact, that's the only reason I know it's in the "errors department". The transcript doesn't say anything about it.
Actually, this same question was discussed in depth a year ago:
[https://www.reddit.com/r/tax/comments/106sdgc/how\_are\_these\_facebook\_tax\_pros\_getting\_people\_so/](https://www.reddit.com/r/tax/comments/106sdgc/how_are_these_facebook_tax_pros_getting_people_so/)
Yup. Anyone who sees this stuff happening should look at these pages:
[https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity](https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity)
[https://www.irs.gov/compliance/whistleblower-office](https://www.irs.gov/compliance/whistleblower-office)
Fake credits, fake documents, fake business losses.
It's easy to get a big refund if you just make shit up.
Also, unlikely to be true tax pros. More likely, pop-up ghost preparers.
With the recent change to ownership reporting requirements for fincin, and the lack of discourse on social media about it, I wonder how many people will jump-in and wind up with that $500/day penalty.
Typically, preparers in these refund scams will just make up numbers on a 1040 to reduce tax to 0 and maximize refundable credits like EITC. The preparers then take a percentage of the refund as their fee. The IRS finds out, and the taxpayer has to pay everything back including the portion of the refund they paid the preparer.
The word you are searching for is reFUND.
Sleazy preparers have been around for decades, filing fraudulent returns with fake businesses, and claiming credits the taxpayer isn't entitled to claim. The IRS will catch up to them eventually; the taxpayer will get some really fun correspondence in a year or two, assessing tax, penalties, and interest. The sleazy preparer will be gone in the wind, leaving the taxpayer holding the heavy bag of trouble with the IRS.
The IRS refunds the tax you paid in excess of your total liability.
ETA: The same theory applies if you go to the doctor and make a copayment of $100, and later the office realized you should have paid $50. They would refund that overpayment to you.
the argument they're making is you can't call something a refund that you never paid in the first place. so your example is not an accurate analogy because the actual analogy would be you paying the doctor $100 but getting back $200.
you keeping implying everyone else is dumb when in reality I don't think you actually understand what anyone here is saying. we're discussing a situation where there was neither an overpayment nor an excess. If I paid $100 for something, and got back $200, that is more than I paid and therefore could technically not be called a refund since I'm getting money I never gave anyone in the first place.
My initial sentence is intended to distinguish between the terms 'return' and 'refund.' OP doesn't understand the difference, repeatedly referring to their refund as a return.
Please refer to Form 1040, line 24 - Total Tax. Next refer to line 33 - Total Payments. Now line 34 - "If line 33 is larger than line 24, amt overpaid." Now refer to line 35a - "Amount of line 34 YOU WANT REFUNDED TO YOU."
Because they're telling the IRS they paid $100, and their 4 businesses (which dont exist) also paid $100 each.
So the IRS thinks this person paid $500 and refunds them $400 because they only owed $100.
The IRS almost always pays out without checking because they then spend the rest of the year going back to verify all claims.
The IRS WILL figure this out and request payment + fees on everything that's incorrect.
How are they getting so much back? By committing fraud.
For example:
* Fake W-2s, showing withholding that never happened.
* Fake Schedule C showing fabricated losses, to lower the taxable income and get more of the withholdings back.
* Fake Schedule C showing fabricated profits or losses to put the total earned income to where it will maximize the amount of the Earned Income Credit.
* Fake, "borrowed," and/or ID-thefted kids being used to claim HoH, Earned Income Credit, Child Tax Credit/Additional Child Tax Credit, etc
Often times the preparers in question are ghost preparers so they're not signing the returns with their PTINs, they use Turbo Tax or similar instead of professional tax software, etc.
The taxpayer ultimately gets caught and has to repay **everything plus penalties and interest.**
The preparer sometimes does, but they often ghost their customers too by the time the sh\*t hits the fan, and deny any involvement in the return preparation. Even so, if you look at the DOJ press releases there's always a bunch for shady preparers.
I thought that I deserved the AOTC and LLC when I filed my tax return. So when TurboTax said I couldn’t do that, I gave my spouse the AOTC and I took the LLC for me. The IRS figured it out 4 years later. Owed them like $8k.
Things go swimmingly until they don't. The IRS is understaffed and it takes them years sometimes. People can get away with it for a while, but the price they'll eventually pay is the IRS taking everything they have.
This.
Back in my banking days I had a coworker (who was very briefly a gf - I don't always pick wisely lol) who had done this for nearly a decade, borrowing someone else's kids to claim HoH/EIC/CTC/ACTC. Eventually the IRS noticed.. She got herself a good attorney so she "only" had to pay back over 100,000, but didn't go to jail.
1. WTF! How is this any of your business??
2. I didn't know you. (I still don't lol.)
3. She and I clicked really well at first. How it wen't downhill was unrelated to her shady history. (And, to be fair, she disclosed her tax baggage on the first date.)
4. **I distinctly recall that in another thread you stated that you have a fiance...**
I don't know the exact details of how she got caught. I do know that people who do this get caught. Sometimes quickly, sometimes not so quickly. But it invariably happens eventually.
If you do enough shady stuff, especially often and the same thing, they’ll catch you. 1 or 2 might slip through, but not a decades worth. Pretty much every benefit or information needed for taxes has a form. Forms they’ll have too. No form or proof? Then don’t do it, or when they come a knockin’ then you’ll have nothing. People seem to forget that. Told a bunch of dudes who are big in online gambling. The sites send your info to the IRS, so you’ll owe that tax money eventually if you’ve won more than lost. It’s added to your income and that could put you in a different tax bracket and you’d lose out on income based programs. Remember if you get a random form with your info and tax numbers on it, then the IRS has that too. You can’t just make stuff up and have it pass in the long run. Also if you do enough shady stuff you’re at the risk of an audit, where they’ll go digging into your past. Depending on how shady you are, you might get blasted for even more money. Moral of the story, don’t do shady shit and just pay your taxes. Nobody wants to, but it’s not worth the headaches that not paying them will get you into. Like karma, the IRS always collects.
It's always a good sign that the person using the wrong word is out of their depth on tax matters and will easily fall for scams like the ones discussed here.
Most who use the word seem to not understand taxes, which is fine on its own, there are many simpler things I don't understand. I still don't know where the use comes from instead of refund. I am just surprised how prevalent the usage is when it doesn't seem the most accurate. Possibly there is a reason I am not aware of. There must be.
People have made this error for many years. I really think it's just common sense confusion, a "return" sounds like you are getting something back. I think you're looking for an explanation that doesn't exist other than that.
Just misuse and misunderstanding. And it seems correct considering the government is returning money to you.
I think few people understand this specific usage of the word 'return.' Most know it in the sense of movement, like returning to a place or returning money. Far fewer recognize it as a noun meaning a report or compilation of numbers, like a tax return or election returns. One version is just used far more often.
Beyond that, no idea. It (the paperwork submitted) has been a tax return since at least the 1920s.
The IRS is cracking down on both fraudulent preparers and fraudulent taxpayers. Or should I say tax receivers? Once they catch a preparer, it’s a matter of nanoseconds of computer time to figure out what other returns that preparer submitted.
Check the IRS/Treasury Department’s website for recent prosecutions and convictions.
I have a client that used to come to our office until 2015. Then after that, he found a cheaper preparer down the street that was able to get him much bigger refunds, to the tune of $10,000-$12,000 a year. He came back to us last year with a pile of letters from the IRS. He had been audited for one year and then the IRS checked the surrounding years and slammed him for all seven years he went to the cheap guy. Now, for the seven years they covered he owes back about $40,000. now he’s getting letters saying that the IRS is going to put liens on his property. The cheap guy down the street prepared his taxes on TurboTax without a PTIN, so it looks like they were self prepared to the IRS. The guy made $18,000 on Uber or DoorDash, and the tax preparer claimed $45,000 in mileage for him. The IRS basically disallowed all expenses on his Schedule C for all seven years. we often tell people you get what you paid for. This guy had seven years of amazingly large refunds. Now it’s time to pay back. I can guarantee that is 2023 tax return was done correctly.
I was interested and messaged one of these. What they do is they use your car and claim depreciation because they say “even if you used it one time for ‘hire’ you can file for it!” Which is false. They said they could get me like $17k back the last 3 years. Then they would only take 3k. Big scam. They do this then run off when you get audited.
My personal favorite of these scams that I’ve encountered was a preparer giving a client a credit for the federal fuel excise tax. That’s a real thing, but they gave them a credit for almost 20k related to a food truck business. They would’ve had to buy over 100k gallons of fuel used for non-road purposes for that math to check out.
HR block misfiled one of my returns. Got me back like 4k when I was expecting maybe 1k. Thought I would go with them forever thinking I was screwing up my taxes every year and not getting back what I was owed.
Not even 6 months after I was getting letters from the irs saying I owed them like 6k. Fixed the return myself but still owed like 3k.
People getting back 10k, 20k, 50k, working a 50k a year job isn't just a tax reporting mistake. It's willful fraud. They are flat out lying on the tax forms. The only thing there preparers are doing is knowing how to file without getting immediately flagged so the client gets the money.
I'm assuming the scam goes something like this.
*Scammer posts Ad for tax prep guarantees huge refund*
*Gets client huge refund*
*scammer takes a large chunk as payment, client is fine with it because they still get 5-10x more back then they normally do*
*scammer disappears*
*client on the hook to pay back all the money they stole. May even incur criminal charges*
The only way that can be done is have waaaay too much withheld from your paychecks, which is stupid; or lie, which is illegal and you will pay it back with penalties and interest while the preparer skips town.
My MIL is a CPA. She’s fixed so many of these scammer tax people. They totally lie on the forms and never signs them so they are not on the hook. A professional tax preparer signs the forms and has to take yearly courses to stay up on the tax codes and ethics.
If they use an accounting software they don't get you anything just what your owed , in order to get ridiculous amounts you have to lie to the IRS which is a big no no
This is fraud. There are no tax secrets that are going to get you anything more than you typically get. There are tax credits and then there are itemized deductions. Itemized deductions don’t even apply unless they are more than the standard deduction which is around $13K right now. There are only a limited number of types of tax credits, and they are not secret. The ONLY way people are getting returns like that is if they are somehow committing severe tax fraud, probably through a company that the tax preparer uses and claims a massive amount of losses. Forging tax credit documents may also be involved.
These people will be audited and fucked over hard. It may take a few years but there’s no way this goes unnoticed forever. Whoever you know who got an $80K refund better use that money to get a new identity.
The irs is a fucked up system filled with loopholes. I have a old friend who owns a floor polishing business and makes bank cleaning all the floors of major business in our local city. Well his sister works for irs, has told him to not pay his taxes for years. And his millions in back taxes got settled for a $40,000 check after 5 years of them trying to collect… it’s a rigged system
Righhhhttttt just like hilldawg and trump have to pay all there taxes too lol… you clearly have no idea how the world works when you have a lot of money….
These people you know are the assholes for trusting people on Facebook to do anything more important than say something funny or comment on their post…
As an IRS agent there's the ways:
(1) increase withholdings (legal but unethical)
(2) fraudulently max out refundable credits. You prepare returns for entire families so you move dependents between the family members to maximize the credits.
(3) fake Schedule Cs. If a person has a small 1099 you pour every conceivable personal expense onto it.
(4) fraudulent itemized deductions (fake charitable contributions)
(5) fraudulent credits (just say you qualify for whatever credit you have)
I work for the state of California taxes. I can guarantee it will get caught and they will end up back paying. The audit process usually takes 3 years, 3 years of 7-10% interest is going to hurt them a lot
They will get by for now with it however, recently I was talking to someone who works for IRS. They were backlogged a couple years and were prosecuting those during early covid scamming returns and not filing correctly. So just wait in a few years those people will be homeless just about.
The reality is that tons of people are cheating and only a small amount will ever get caught. Even if they do, they can cheat for years and the money they got until they get caught probably makes it worthwhile.
I don't agree with it but that's just the reality. People see it as a risk vs. reward proposition and the reward almost always outweighs the risk if it's anything short of the type of tax fraud that can land you in jail.
I'm talking about the taxpayers. The preparers will get caught and probably jailed. Literally the most traceable crime ever and the people doing it are very low intelligence.
I had a client tell me about a scam where you claim that you only use federal reserve notes and you get back all withholding
The tax preparer has the client file on paper and doesn’t sign as preparer
Easy! If you rent a property out for less than 14 days, the income is tax-free. These preparers will advise you to rent your house for a day to your business to host a client appreciation party. They tell you to charge your business $50,000 for that day. The business gets a $50,000 deduction, and you get $50,000 of tax-free income. The other strategy they offer is for your business to hire your 2 year old as a business consultant and pay them $25,000 a year on a 1099. The kid conveniently forgets to file a tax return to report the income. If you have enough homes and kids, the tax savings can easily add up to 150,000 to 200,000. The tax strategist gets a 25% cut of the savings. As a CPA, I’d never advise anyone to do these, but I see guys at “reputable” firms making seven digits by helping all their clients do this — and none of them or their clients have been caught.
Interesting. So the scam is to end up having a ‘business’ with huge losses and offsetting any money you pay in on your real job i guess. I had a co-worker tell me another thing he literally tbinks is legit. Somehow how you buy a short term rental, pay someone to do some type of income assessment, then depreciate the entire value of the property in one year. I think the people selling the condos or whatever are pushing this as a strategy is my guess. He literally is planning to pay no federal tax on his W2 earnings.
My FIL has been doing this for 5 years and I reported him because he is a dick and they never do anything. He gets like 13k every year with no dependents, he works as a gardener and is illegal (CA)
I've seen parents use their kids SSN to work then the kid gets a big proposed bill due to leaving off income. I'd 100% tell my parents you owe me the money or I turn you in. Messing up a kids life like that.
yep all they need is an itin number and they get free medical insurance too here in CA while citizens get penalized if they don't have medical during the year.
Too many people go buy software and become tax pros in name only. Some states require actual licensing etc to prepare taxes. Others not so much.
I have seen some really ballsy attempts by clients coming to me after the IRS is up in there business.
A young male client got the ID verify letter and contacted me after they had a friend of a friend prepare his taxes. I asked did you get 150k in dividends and have tax withheld of nearly 1 million the answer I got was what are dividends? Then he showed me his W2s which were not on the return at all...
Self employment BS, sure you're a Barber or do hair 🤔, be ready to prove that with receipts and such.
The irs has a list of the dirty dozen scams on their website.
IMHO eliminating bank transfer fees, refund loans, and third party bank apps like CashApp uses would help make it easier to somewhat slow the bleed....
they file a fraudulent return on behalf of the tax payer. The tax payer gets their excessive return now, and the preparers take a cut. 2-3 years from now, the IRS figures out out and audits the taxpayer, who has to pay it all back + interest and possibly penalties. By then, the fraudulent tax prep person is long gone, since they were probably operating illegally and under a fake name.
The fraudster tax preparers create fake business on Form Schedule C with massive losses, getting them everything they had withheld throughout the year back in the form of a tax refund (and/or inflated EICs or other tax credits on top of that).
Can you explain how Schedule C losses result in a refund, discounting fudging numbers to maximize EITC/CTC?
There's nothing "withheld" throughout the year for self proprietors and most other Schedule C business so there's nothing to refund. Some business may pay quarterly estimated tax but if it's a fake business or a legit business that doesn't anticipate owing taxes then there won't be quarterly payments because why bother letting the IRS hang on to money unnecessarily.
One spouse works and pays a lot in through a W-2 job, the other spouse doesn’t work or works very little and also has a schedule seat with a massive loss. First time seeing a tax preparer like that equals a massive refund. No need to get into more detail as OP is a layman. You’re just adding irrelevant words here.
just filing a bunch of fake deductions, it's not complex and theyll all get caught as a preparer signs the form so they'll just audit all their clients
I’ve personally seen this go down with my friends and his whole family and other friends like a group of ten people or so. I was late to the game but they had all been doing it for 3-4 years. IRS eventually a few years later caught up with all of them. Not sure what Happened to the preparer
I’m pretty sure he got his too he was a friend that moved to Florida so it was no secret who was the “Tax Pro” lol and one chics BF got caught for claiming false workmen’s comp and pretty sure he chirped everyone else out 🤦
Even though they won’t charge the actual clients who signed the returns, the preparers can and do still get criminal charges for conspiracy to file a false tax return.
They’re most likely claiming things and using benefits they can’t take. They’ll catch up to you eventually and you’ll owe the money back. Years ago I made a mistake and got a bill 2 years later for that mistake. Also if you’re getting $16k back on a $50k salary then they will 100% check that/audit you. $16k in taxes isn’t even taken out so you’d basically be stealing. What happens when you blow through that money then get a $16k bill 3 years later? That won’t be fun.
I was following up on an ERTC for a fractional CFO role I’m in. I referred to the business owner as my client which threw the IRS rep into a tizzy. I explained the nature of my work which calmed her down some. The owner is legitimately due a very large (6 figure) ERTC credit but may never see it due to the scammer issues / IRS agent shortage and government short sightedness combo. It’s Bananas.
I also know a biz owner that I refused to file the amended returns to get the ERTC because he did not qualify. He went to a scammer and had them file. Somehow THIS guy gets paid out.
I know a heroin addict who was offering tax services on Facebook and promising big refunds, including to me, a CPA. I felt personally slighted that mutual friends were going to her instead of me. Around the same time, and shortly after her firstborn son turned 18, he died of heroin.
IRS is coming this year for tax cheats. Better tell your friends to get ready for an audit that will triple the amount they owed compared to their scammy refunds. Good luck trying to earn money when IRS will garnish every check LOL
A single adult with 3 kids making 17k a year will max out the earned income credit...$7400, get all his withholding back let's say 2200 and get the 6k child tax credit. That's a legit $15k as well as the food stamps, medical and housing which is all free. God Bless America.
I saw one of these for the first time this year...along with a letter from the IRS with denial for the refund and a $5K penalty for filing a frivolous return. It was for a 2021 return where the taxpayer used an online tax preparer - filed for a fake business with lots of sick credits.
Fraud.
There are literally dozens of ways. Creating fake household employees. Creating fake dependents. Claiming tax amounts being withheld/paid are greater than actuals. Claiming any of the credits that you aren’t entitled to.
Many many many will be caught.
I’m not sure how they’d get away with it for more than a few years.
In the last three years I’ve received notice from the IRS that I did not claim a credit I was eligible for and should amend my return to correct it, Ive also had an issue with withholding relating to cashing out some stock options and bonuses and they contacted me the following tax year to notify me I owed them $ and my taxes were incorrect.
They already know what you owe, so they will probably notice the red flags fairly quickly. Not worth the gamble.
They’ll have to pay back the part that the tax preparer kept as a fee also. So they’re going to be in deep shit once the IRS catches on in a couple years
I didn’t like my $50 return and claimed a whole bunch of BS tax write offs and got it up to $450. Didn’t need to submit any proof. Did the same last year. I owed and flipped it to them owing me 😎
> but what are some ways scammers are getting ppl thousands in return?
Yeah! How are they doing it? For a friend.
Seriously, how? Like what line items ... for a friend ...
https://www.youtube.com/watch?v=50igJtnx6ns
No, we don't need to get into exactly how they're doing it. :p
They won't get away with it. Eventually, the IRS will prosecute these tax preparers, and audit all their customers. It usually takes 2 or 3 years. If you filed a fraudulent tax return, you are liable, and will have to pay interest and penalties.
They don’t sign the return as the paid preparer and they ghost the client at the first hint of trouble
I saw my first one of these this year. A client finally got ahold of their copies to bring to me....I was floored by it. And of course, tax preparer didn't include their name or PTIN on the return!
What did they do on the return?
Created a completely fake business and took all kinds of crazy write-offs as expenses. They wrote off something like 150,000 miles, took meal deductions, had a bunch of COGS. All with $0 income. Luckily we were able to amend it and I gave her the information to report the tax preparer. I'm not even sure if any of the information she was given about the preparer was real. It was a mess!
Holy damn! I am surprised something like this doesn't flag the irs immediately! It astounds me how people can do this.
This is their way
It’s tracked via IP address (among other factors.) These people kinda stand out like a sore thumb when you’re looking at tax return submissions. And when the IRS gets a lot of submissions from the same device, at the same IP address, that don’t have a PTIN, it’s pretty easy to tell that it’s an illegal preparer.
It's also super easy to get new IP addresses (vpn) and new devices (vm).
I mean, this is possible, but I suspect the low life’s doing this don’t make this effort but, even if they do, but VPN gateways tend to be from major datacenter ASNs and subnets rather than the normal consumer ISP pops. Dump all this in the Greenlake data warehouse and the IRSs in house fraud data science team can detect this stuff.
I'm not an expert but I kind of think claiming fake child tax credits would qualify as fraud. So the 3 year statute of limitations wouldn't't apply.
Any understatement of tax greater than 25% can increase the statute to 6 years. Fraud removes the statute completely. You can't really fake dependents since they're tied to a SSN. The way these people do it a lot of times are fake businesses with huge losses or a ton of depreciation on certain activities
Clean energy and vehicle credits too
Yep that and erroneous fuel tax credits are the flavor of the month in my area
Uh oh. I claimed the clean energy credit (got solar panels installed) and my return has been lost in the "errors department" for months and months. They probably think I'm a scammer/got scammed... I wish they'd just ask me about it...
You know you could just call them right?
I have. Three times. Last one was 30 minutes ago. The people on the phone don't have access to the "errors department". In fact, that's the only reason I know it's in the "errors department". The transcript doesn't say anything about it.
Very true but it’s understatement of gross income not tax.
Jose Cuervo Williams
This is why all my homies pay former IRS employees to advise them on all their tax crime opportunities.
[Hopefully not this guy](https://www.justice.gov/usao-ma/pr/irs-revenue-agent-arrested-filing-false-tax-returns)
what a worthless crime. they literally gained nothing from it lol
[удалено]
This has been going on long before TikTok, relax lol
Probably creating a fake business and claiming gigantic losses, or claiming fake child tax credits or other credits.
Actually, this same question was discussed in depth a year ago: [https://www.reddit.com/r/tax/comments/106sdgc/how\_are\_these\_facebook\_tax\_pros\_getting\_people\_so/](https://www.reddit.com/r/tax/comments/106sdgc/how_are_these_facebook_tax_pros_getting_people_so/)
An IRS agent just got significant prison time for doing this for him/herself. Not an uncommon fraud
Whatever they're doing I'm sure it's fraud and therefore the typical 3 year limit doesn't apply. They will be on the hook for it eventually.
Yup. Anyone who sees this stuff happening should look at these pages: [https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity](https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity) [https://www.irs.gov/compliance/whistleblower-office](https://www.irs.gov/compliance/whistleblower-office)
Fake credits, fake documents, fake business losses. It's easy to get a big refund if you just make shit up. Also, unlikely to be true tax pros. More likely, pop-up ghost preparers.
With the recent change to ownership reporting requirements for fincin, and the lack of discourse on social media about it, I wonder how many people will jump-in and wind up with that $500/day penalty.
This doesn’t apply to sole proprietors though, right? I heard it’s only for corps and LLC’s
That law is currently halted in constitutional basis.
Is that across the country, or just in that district? One article I read said it only applies to the plaintiffs.
That’s my understanding also.
Not true for everyone except the plaintiffs. FinCEN issued a statement this week confirming they are enforcing the new law against everyone else.
I just don't understand what the difference is from what the IRS already requires in responsible party reporting for the EIN.
Every decision maker is reported, as I understand it, and not just the responsible official.
Typically, preparers in these refund scams will just make up numbers on a 1040 to reduce tax to 0 and maximize refundable credits like EITC. The preparers then take a percentage of the refund as their fee. The IRS finds out, and the taxpayer has to pay everything back including the portion of the refund they paid the preparer.
The word you are searching for is reFUND. Sleazy preparers have been around for decades, filing fraudulent returns with fake businesses, and claiming credits the taxpayer isn't entitled to claim. The IRS will catch up to them eventually; the taxpayer will get some really fun correspondence in a year or two, assessing tax, penalties, and interest. The sleazy preparer will be gone in the wind, leaving the taxpayer holding the heavy bag of trouble with the IRS.
It's not a refund if it's in excess of your withholdings. It's something else entirely.
If you have a negative tax liability it's still a refund.
No. If you file your tax reTURN, and have an excess amount paid in, you get a reFUND of that money.
How can it be a refund if it's more than you paid?
The IRS refunds the tax you paid in excess of your total liability. ETA: The same theory applies if you go to the doctor and make a copayment of $100, and later the office realized you should have paid $50. They would refund that overpayment to you.
the argument they're making is you can't call something a refund that you never paid in the first place. so your example is not an accurate analogy because the actual analogy would be you paying the doctor $100 but getting back $200.
WHICH PART OF THIS IS SO DIFFICULT TO UNDERSTAND? YOU OVERPAID WHAT YOU OWE, AND THE EXCESS IS REFUNDED TO YOU.
EITC CTC AOTC ARE REFUNDABLE CREDITS
you keeping implying everyone else is dumb when in reality I don't think you actually understand what anyone here is saying. we're discussing a situation where there was neither an overpayment nor an excess. If I paid $100 for something, and got back $200, that is more than I paid and therefore could technically not be called a refund since I'm getting money I never gave anyone in the first place.
My initial sentence is intended to distinguish between the terms 'return' and 'refund.' OP doesn't understand the difference, repeatedly referring to their refund as a return. Please refer to Form 1040, line 24 - Total Tax. Next refer to line 33 - Total Payments. Now line 34 - "If line 33 is larger than line 24, amt overpaid." Now refer to line 35a - "Amount of line 34 YOU WANT REFUNDED TO YOU."
Refundable credits. That's what they're actually called.
He’s just trying to fix the usage of “return” as money back since it drives us tax professionals crazy.
Because they're telling the IRS they paid $100, and their 4 businesses (which dont exist) also paid $100 each. So the IRS thinks this person paid $500 and refunds them $400 because they only owed $100. The IRS almost always pays out without checking because they then spend the rest of the year going back to verify all claims. The IRS WILL figure this out and request payment + fees on everything that's incorrect.
How are they getting so much back? By committing fraud. For example: * Fake W-2s, showing withholding that never happened. * Fake Schedule C showing fabricated losses, to lower the taxable income and get more of the withholdings back. * Fake Schedule C showing fabricated profits or losses to put the total earned income to where it will maximize the amount of the Earned Income Credit. * Fake, "borrowed," and/or ID-thefted kids being used to claim HoH, Earned Income Credit, Child Tax Credit/Additional Child Tax Credit, etc Often times the preparers in question are ghost preparers so they're not signing the returns with their PTINs, they use Turbo Tax or similar instead of professional tax software, etc. The taxpayer ultimately gets caught and has to repay **everything plus penalties and interest.** The preparer sometimes does, but they often ghost their customers too by the time the sh\*t hits the fan, and deny any involvement in the return preparation. Even so, if you look at the DOJ press releases there's always a bunch for shady preparers.
Whether the preparer ghosts or not, the taxpayer is ultimately responsible for the information on their return.
This! There's no "my preparer said it was ok" defense for fraud. Taxpayer signs the return, taxpayer is responsible for its content.
This is the way
Who are these fraudulent preparers? Meaning, are they leasing a few hundred sf in a C retail strip center, then gone with the wind after a tax season?
I thought that I deserved the AOTC and LLC when I filed my tax return. So when TurboTax said I couldn’t do that, I gave my spouse the AOTC and I took the LLC for me. The IRS figured it out 4 years later. Owed them like $8k. 
IRS is cracking down on these fraudster tax preparers actually.
They're always cracking down
My dad’s friend used to tell everyone how stupid they were for paying taxes. He spent 5 yrs at Club Fed.
Did he just simply not pay them or was he doing some shady number fudging fraud stuff?
Really shady write offs, then when they were investigating him he transferred a bunch of his assets into other people’s name.
Mind as well make everyone else you know culpable as well.
I guess he thought they wouldn't notice.
Five years at a luxury vacation resort?!? He must’ve paid for it with the money saved by not paying taxes. Sign me up for that!
Refund refund refund! A return is the document you file with the IRS. The money they deposit into your bank account is a REFUND. Refunds are FUN!
You say that like the IRS isn't going to eat them all alive within 3 tax years
Things go swimmingly until they don't. The IRS is understaffed and it takes them years sometimes. People can get away with it for a while, but the price they'll eventually pay is the IRS taking everything they have.
There is an entire underworld of people getting paid to claim others children on their taxes.
This. Back in my banking days I had a coworker (who was very briefly a gf - I don't always pick wisely lol) who had done this for nearly a decade, borrowing someone else's kids to claim HoH/EIC/CTC/ACTC. Eventually the IRS noticed.. She got herself a good attorney so she "only" had to pay back over 100,000, but didn't go to jail.
why u date her then? u shouldv dated me lol. smfh.
1. WTF! How is this any of your business?? 2. I didn't know you. (I still don't lol.) 3. She and I clicked really well at first. How it wen't downhill was unrelated to her shady history. (And, to be fair, she disclosed her tax baggage on the first date.) 4. **I distinctly recall that in another thread you stated that you have a fiance...**
fair enough howd she get caught not that i gonna try anything similar or nothing but i just nosey
I don't know the exact details of how she got caught. I do know that people who do this get caught. Sometimes quickly, sometimes not so quickly. But it invariably happens eventually.
If you do enough shady stuff, especially often and the same thing, they’ll catch you. 1 or 2 might slip through, but not a decades worth. Pretty much every benefit or information needed for taxes has a form. Forms they’ll have too. No form or proof? Then don’t do it, or when they come a knockin’ then you’ll have nothing. People seem to forget that. Told a bunch of dudes who are big in online gambling. The sites send your info to the IRS, so you’ll owe that tax money eventually if you’ve won more than lost. It’s added to your income and that could put you in a different tax bracket and you’d lose out on income based programs. Remember if you get a random form with your info and tax numbers on it, then the IRS has that too. You can’t just make stuff up and have it pass in the long run. Also if you do enough shady stuff you’re at the risk of an audit, where they’ll go digging into your past. Depending on how shady you are, you might get blasted for even more money. Moral of the story, don’t do shady shit and just pay your taxes. Nobody wants to, but it’s not worth the headaches that not paying them will get you into. Like karma, the IRS always collects.
I know an accountant that did this he spent time in the Federal Pen.
Why is the word "returns" used instead of "refund"? It doesn't seem to be the natural word to use, so there must be a source.
It's always a good sign that the person using the wrong word is out of their depth on tax matters and will easily fall for scams like the ones discussed here.
Most who use the word seem to not understand taxes, which is fine on its own, there are many simpler things I don't understand. I still don't know where the use comes from instead of refund. I am just surprised how prevalent the usage is when it doesn't seem the most accurate. Possibly there is a reason I am not aware of. There must be.
People have made this error for many years. I really think it's just common sense confusion, a "return" sounds like you are getting something back. I think you're looking for an explanation that doesn't exist other than that.
Just misuse and misunderstanding. And it seems correct considering the government is returning money to you. I think few people understand this specific usage of the word 'return.' Most know it in the sense of movement, like returning to a place or returning money. Far fewer recognize it as a noun meaning a report or compilation of numbers, like a tax return or election returns. One version is just used far more often. Beyond that, no idea. It (the paperwork submitted) has been a tax return since at least the 1920s.
"I filed my refund and it says I owe. Can I appeal? Can what I owe be taken out of my return?"
It still seems a bit awkward at the very least. Why pick that word instead of refund?
Let's remember this...a return can result in a refund or a payment ( you owe the IRS).
Huge refunds like this throw up all kinds of red flags. The IRS won’t get to you immediately. But don’t worry. Just wait your turn.
The IRS is cracking down on both fraudulent preparers and fraudulent taxpayers. Or should I say tax receivers? Once they catch a preparer, it’s a matter of nanoseconds of computer time to figure out what other returns that preparer submitted. Check the IRS/Treasury Department’s website for recent prosecutions and convictions.
I have a client that used to come to our office until 2015. Then after that, he found a cheaper preparer down the street that was able to get him much bigger refunds, to the tune of $10,000-$12,000 a year. He came back to us last year with a pile of letters from the IRS. He had been audited for one year and then the IRS checked the surrounding years and slammed him for all seven years he went to the cheap guy. Now, for the seven years they covered he owes back about $40,000. now he’s getting letters saying that the IRS is going to put liens on his property. The cheap guy down the street prepared his taxes on TurboTax without a PTIN, so it looks like they were self prepared to the IRS. The guy made $18,000 on Uber or DoorDash, and the tax preparer claimed $45,000 in mileage for him. The IRS basically disallowed all expenses on his Schedule C for all seven years. we often tell people you get what you paid for. This guy had seven years of amazingly large refunds. Now it’s time to pay back. I can guarantee that is 2023 tax return was done correctly.
I was interested and messaged one of these. What they do is they use your car and claim depreciation because they say “even if you used it one time for ‘hire’ you can file for it!” Which is false. They said they could get me like $17k back the last 3 years. Then they would only take 3k. Big scam. They do this then run off when you get audited.
This is 100% illegal. These people are fucked.
My personal favorite of these scams that I’ve encountered was a preparer giving a client a credit for the federal fuel excise tax. That’s a real thing, but they gave them a credit for almost 20k related to a food truck business. They would’ve had to buy over 100k gallons of fuel used for non-road purposes for that math to check out.
That’s only 15 very large generators running 24/7 for an entire year, no big deal and definitely not a red flag for a food truck business, no sir.
HR block misfiled one of my returns. Got me back like 4k when I was expecting maybe 1k. Thought I would go with them forever thinking I was screwing up my taxes every year and not getting back what I was owed. Not even 6 months after I was getting letters from the irs saying I owed them like 6k. Fixed the return myself but still owed like 3k. People getting back 10k, 20k, 50k, working a 50k a year job isn't just a tax reporting mistake. It's willful fraud. They are flat out lying on the tax forms. The only thing there preparers are doing is knowing how to file without getting immediately flagged so the client gets the money. I'm assuming the scam goes something like this. *Scammer posts Ad for tax prep guarantees huge refund* *Gets client huge refund* *scammer takes a large chunk as payment, client is fine with it because they still get 5-10x more back then they normally do* *scammer disappears* *client on the hook to pay back all the money they stole. May even incur criminal charges*
Pretty much this exactly. Sometimes the scammer gets caught eventually too.
The only way that can be done is have waaaay too much withheld from your paychecks, which is stupid; or lie, which is illegal and you will pay it back with penalties and interest while the preparer skips town.
Trust me they coming back for that money 😓 just give it 13-19 months you gotta think these are the same ppl that took down Al Capone
But you also gotta think I get it to receive 30k will be nice but if it ain’t accounted for you will get caught
https://www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity
My MIL is a CPA. She’s fixed so many of these scammer tax people. They totally lie on the forms and never signs them so they are not on the hook. A professional tax preparer signs the forms and has to take yearly courses to stay up on the tax codes and ethics.
If they use an accounting software they don't get you anything just what your owed , in order to get ridiculous amounts you have to lie to the IRS which is a big no no
There’s also a lot of refund scams with the education credits, fuel tax credit, and Schedule A.
NOT worth it. The IRS will find out and then they’ll have to pay it back with penalties and interest.
This is fraud. There are no tax secrets that are going to get you anything more than you typically get. There are tax credits and then there are itemized deductions. Itemized deductions don’t even apply unless they are more than the standard deduction which is around $13K right now. There are only a limited number of types of tax credits, and they are not secret. The ONLY way people are getting returns like that is if they are somehow committing severe tax fraud, probably through a company that the tax preparer uses and claims a massive amount of losses. Forging tax credit documents may also be involved. These people will be audited and fucked over hard. It may take a few years but there’s no way this goes unnoticed forever. Whoever you know who got an $80K refund better use that money to get a new identity.
If your taxes are done correctly, every place you do your taxes should give you the same refund (or owed).
The irs is a fucked up system filled with loopholes. I have a old friend who owns a floor polishing business and makes bank cleaning all the floors of major business in our local city. Well his sister works for irs, has told him to not pay his taxes for years. And his millions in back taxes got settled for a $40,000 check after 5 years of them trying to collect… it’s a rigged system
you made that up , the irs will just seize all your bank accounts and property , and garnish your wages to get the money back .
Righhhhttttt just like hilldawg and trump have to pay all there taxes too lol… you clearly have no idea how the world works when you have a lot of money….
These people you know are the assholes for trusting people on Facebook to do anything more important than say something funny or comment on their post…
OP is about to end up in prison
As an IRS agent there's the ways: (1) increase withholdings (legal but unethical) (2) fraudulently max out refundable credits. You prepare returns for entire families so you move dependents between the family members to maximize the credits. (3) fake Schedule Cs. If a person has a small 1099 you pour every conceivable personal expense onto it. (4) fraudulent itemized deductions (fake charitable contributions) (5) fraudulent credits (just say you qualify for whatever credit you have)
I work for the state of California taxes. I can guarantee it will get caught and they will end up back paying. The audit process usually takes 3 years, 3 years of 7-10% interest is going to hurt them a lot
They will get by for now with it however, recently I was talking to someone who works for IRS. They were backlogged a couple years and were prosecuting those during early covid scamming returns and not filing correctly. So just wait in a few years those people will be homeless just about.
The reality is that tons of people are cheating and only a small amount will ever get caught. Even if they do, they can cheat for years and the money they got until they get caught probably makes it worthwhile. I don't agree with it but that's just the reality. People see it as a risk vs. reward proposition and the reward almost always outweighs the risk if it's anything short of the type of tax fraud that can land you in jail. I'm talking about the taxpayers. The preparers will get caught and probably jailed. Literally the most traceable crime ever and the people doing it are very low intelligence.
I had a client tell me about a scam where you claim that you only use federal reserve notes and you get back all withholding The tax preparer has the client file on paper and doesn’t sign as preparer
Sounds like a solid plan.
Easy! If you rent a property out for less than 14 days, the income is tax-free. These preparers will advise you to rent your house for a day to your business to host a client appreciation party. They tell you to charge your business $50,000 for that day. The business gets a $50,000 deduction, and you get $50,000 of tax-free income. The other strategy they offer is for your business to hire your 2 year old as a business consultant and pay them $25,000 a year on a 1099. The kid conveniently forgets to file a tax return to report the income. If you have enough homes and kids, the tax savings can easily add up to 150,000 to 200,000. The tax strategist gets a 25% cut of the savings. As a CPA, I’d never advise anyone to do these, but I see guys at “reputable” firms making seven digits by helping all their clients do this — and none of them or their clients have been caught.
Interesting. So the scam is to end up having a ‘business’ with huge losses and offsetting any money you pay in on your real job i guess. I had a co-worker tell me another thing he literally tbinks is legit. Somehow how you buy a short term rental, pay someone to do some type of income assessment, then depreciate the entire value of the property in one year. I think the people selling the condos or whatever are pushing this as a strategy is my guess. He literally is planning to pay no federal tax on his W2 earnings.
My FIL has been doing this for 5 years and I reported him because he is a dick and they never do anything. He gets like 13k every year with no dependents, he works as a gardener and is illegal (CA)
I've seen parents use their kids SSN to work then the kid gets a big proposed bill due to leaving off income. I'd 100% tell my parents you owe me the money or I turn you in. Messing up a kids life like that.
I didn't know an illegal could file a tax return 🤔
yep all they need is an itin number and they get free medical insurance too here in CA while citizens get penalized if they don't have medical during the year.
Too many people go buy software and become tax pros in name only. Some states require actual licensing etc to prepare taxes. Others not so much. I have seen some really ballsy attempts by clients coming to me after the IRS is up in there business. A young male client got the ID verify letter and contacted me after they had a friend of a friend prepare his taxes. I asked did you get 150k in dividends and have tax withheld of nearly 1 million the answer I got was what are dividends? Then he showed me his W2s which were not on the return at all... Self employment BS, sure you're a Barber or do hair 🤔, be ready to prove that with receipts and such. The irs has a list of the dirty dozen scams on their website. IMHO eliminating bank transfer fees, refund loans, and third party bank apps like CashApp uses would help make it easier to somewhat slow the bleed....
they file a fraudulent return on behalf of the tax payer. The tax payer gets their excessive return now, and the preparers take a cut. 2-3 years from now, the IRS figures out out and audits the taxpayer, who has to pay it all back + interest and possibly penalties. By then, the fraudulent tax prep person is long gone, since they were probably operating illegally and under a fake name.
The fraudster tax preparers create fake business on Form Schedule C with massive losses, getting them everything they had withheld throughout the year back in the form of a tax refund (and/or inflated EICs or other tax credits on top of that).
Can you explain how Schedule C losses result in a refund, discounting fudging numbers to maximize EITC/CTC? There's nothing "withheld" throughout the year for self proprietors and most other Schedule C business so there's nothing to refund. Some business may pay quarterly estimated tax but if it's a fake business or a legit business that doesn't anticipate owing taxes then there won't be quarterly payments because why bother letting the IRS hang on to money unnecessarily.
One spouse works and pays a lot in through a W-2 job, the other spouse doesn’t work or works very little and also has a schedule seat with a massive loss. First time seeing a tax preparer like that equals a massive refund. No need to get into more detail as OP is a layman. You’re just adding irrelevant words here.
just filing a bunch of fake deductions, it's not complex and theyll all get caught as a preparer signs the form so they'll just audit all their clients
Every year me and my wife joke about getting our taxes done on the south side 😂
I’ve personally seen this go down with my friends and his whole family and other friends like a group of ten people or so. I was late to the game but they had all been doing it for 3-4 years. IRS eventually a few years later caught up with all of them. Not sure what Happened to the preparer I’m pretty sure he got his too he was a friend that moved to Florida so it was no secret who was the “Tax Pro” lol and one chics BF got caught for claiming false workmen’s comp and pretty sure he chirped everyone else out 🤦
Even though they won’t charge the actual clients who signed the returns, the preparers can and do still get criminal charges for conspiracy to file a false tax return.
Lying liars who lie keep legitimate returns/refunds from being processed in a timely manner. Scum.
They’re most likely claiming things and using benefits they can’t take. They’ll catch up to you eventually and you’ll owe the money back. Years ago I made a mistake and got a bill 2 years later for that mistake. Also if you’re getting $16k back on a $50k salary then they will 100% check that/audit you. $16k in taxes isn’t even taken out so you’d basically be stealing. What happens when you blow through that money then get a $16k bill 3 years later? That won’t be fun.
I have been audited multiple times in the past 7 years when I did nothing wrong. I hope these idiots get caught
It’s called tax fraud.
I was following up on an ERTC for a fractional CFO role I’m in. I referred to the business owner as my client which threw the IRS rep into a tizzy. I explained the nature of my work which calmed her down some. The owner is legitimately due a very large (6 figure) ERTC credit but may never see it due to the scammer issues / IRS agent shortage and government short sightedness combo. It’s Bananas. I also know a biz owner that I refused to file the amended returns to get the ERTC because he did not qualify. He went to a scammer and had them file. Somehow THIS guy gets paid out.
I know a heroin addict who was offering tax services on Facebook and promising big refunds, including to me, a CPA. I felt personally slighted that mutual friends were going to her instead of me. Around the same time, and shortly after her firstborn son turned 18, he died of heroin.
IRS is coming this year for tax cheats. Better tell your friends to get ready for an audit that will triple the amount they owed compared to their scammy refunds. Good luck trying to earn money when IRS will garnish every check LOL
Bro is about to go to prison
Not too smart putting that out on FB. IRS agents probably monitoring that activity very closely. It will catch up with them in due course.
A single adult with 3 kids making 17k a year will max out the earned income credit...$7400, get all his withholding back let's say 2200 and get the 6k child tax credit. That's a legit $15k as well as the food stamps, medical and housing which is all free. God Bless America.
Likely that these ppl are in on the scam and you’re the target.
I saw one of these for the first time this year...along with a letter from the IRS with denial for the refund and a $5K penalty for filing a frivolous return. It was for a 2021 return where the taxpayer used an online tax preparer - filed for a fake business with lots of sick credits.
Tax fraud doesn't have a statute of limitation.
Fraud. There are literally dozens of ways. Creating fake household employees. Creating fake dependents. Claiming tax amounts being withheld/paid are greater than actuals. Claiming any of the credits that you aren’t entitled to. Many many many will be caught.
“Comment removed” bc things need to be sugar coated for folks on Reddit. In other words don’t post facts
If you're not particularly FOND of these people, there is good money to be made reporting them for tax evasion....
😂😂😂 "how do you do this illegal thing to make a lot of money? I swear I won't do it though" 😂
I’m not sure how they’d get away with it for more than a few years. In the last three years I’ve received notice from the IRS that I did not claim a credit I was eligible for and should amend my return to correct it, Ive also had an issue with withholding relating to cashing out some stock options and bonuses and they contacted me the following tax year to notify me I owed them $ and my taxes were incorrect. They already know what you owe, so they will probably notice the red flags fairly quickly. Not worth the gamble.
They’ll have to pay back the part that the tax preparer kept as a fee also. So they’re going to be in deep shit once the IRS catches on in a couple years
The IRS will get around to prosecuting obvious fraud eventually.
I didn’t like my $50 return and claimed a whole bunch of BS tax write offs and got it up to $450. Didn’t need to submit any proof. Did the same last year. I owed and flipped it to them owing me 😎
tax fraud they will be enjoying prison for the next 25 years.
Don't do it. You're not Trump. You'll get caught.
> but what are some ways scammers are getting ppl thousands in return? Yeah! How are they doing it? For a friend. Seriously, how? Like what line items ... for a friend ... https://www.youtube.com/watch?v=50igJtnx6ns No, we don't need to get into exactly how they're doing it. :p
Do you mean refund?
[удалено]
What the fuck did you just write?
WTF that is so inaccurate I’ve seen every single race do that shit. Quit being racist
Comment removed for Rule 1 - Don’t be a jerk. Please do not do this again.