How to deal with first time home buyer $8000 FRAUD?
Crimson Goddess asked:
Hi everyone,
Hi everyone,
I and my sister plan to open a small tax business this year and we are wondering how to deal with First Time Home Buyer Fraud? IRS is getting strictly and they may claim the preparers for committing fraud. You know I what mean?
Can you please give me some idea?
Herman
July 17th, 2009 at 4:33 am
Norman
I’m not sure I understand your question. Are you complaining about the program itself? Or have you been defrauded by someone?
July 20th, 2009 at 7:12 am
Monica
Easy, You ask the taxpayer for the same documentation the IRS is going to ask for anyway and attach it to the tax return and mail it in.
Eg, HUD-1 settlement page.
In normal years, your problem is going to be people lying to you about whether or not they are eligible for EIC.
July 22nd, 2009 at 8:20 pm
Lauren
As a professional tax preparer you have a finite responsiblity to file legal tax returns. IF a client wants you to do something that makes you feel uncomfortable then tell you just won’t do it. IF that means they get mad and go somewhere else then so be it. It’s not worth your ability to prepare tax returns to retain one questionable client.
A position you take on a tax return must meet the “supportable” safe haven. IOW, if you take a position on a tax return that the IRS might possibly question, then you’d better have some solid legal cite to backup your claim. Otherwise, you could face fines, penalties and other sanctions.
You need to read IRS Circular 230 for the basic rules that apply to PTPs. Many of us belong to the National Association of Tax Profesionals [NATP]. You might want to visit their site for guidance as well.
Click on the first link below to pull up a copy of Circular 230. Click the second link to visit the NATP website.
Hope this helps…
Mike Womack, Sr. Partner
Zero Degrees Tax LLP
Moore, OK
Lawton, OK
July 23rd, 2009 at 7:31 pm
Curtis
A copy of the HUD-1 closing form should suffice.
July 25th, 2009 at 2:15 pm
Jessie
If you have good reason to believe that at customer is attempting to file a fraudulent claim you simply advise them of the law and send them packing if they insist on your preparing a fraudulent return. You are only potentially liable for prosecution if you knowingly prepare a return that you know to be fraudulent. (Rumor, innuendo, suspicions, gut feelings, etc. don’t count. Facts do.)
The taxpayer is responsible for the accuracy of the return. If they tell you that they bought a home and the information that they provide you indicates that they might be eligible for the credit then you are not at risk of the IRS’ wrath if the claim turns out to be fraudulent.
You might suggest that by attaching a copy of the HUD-1 settlement sheet the processing of the claim will be expedited (true) but if they say that they’ll take their chances without it you have to take what they say at face value.
The IRS is auditing claims 100% for this item. While undoubtedly there are a few tax toads out there who actively prepare or suggest fraudulent practices for a cut of the gains, the odds of success on this one are extremely low.
July 27th, 2009 at 5:51 pm
Kelly
Housing credit issues aside, always ask to see their previous year’s tax return. It will clue you in to things you might forget to ask and is also an opportunity to look for things that were overlooked for which you can prepare an amended return and collect an extra fee.
Ask to see their escrow closing statement to confirm the exact amount of credit they are entitled to.
Using the same address as last year would be a good clue too.