The IRS is Cracking Down on Fraudulent Tax Pros (Beware of these Red Flags)

Episode Transcript

(00:00):
Ever heard of"the magician"?

(00:01):
Not the one who pulls rabbitsfrom hats.
This one pulled one hundredmillion dollars from the IRS
through fraudulent tax returns.
But here's what's scarier.
His clients are the ones stillpaying for it today.
In the next few minutes, I'mgoing to show you exactly: how
fraudulent tax preparersoperate, the red flags the IRS
is cracking down on right now,and most importantly, how to

(00:21):
protect yourself before it's toolate.
Really quickly.
My name is Davian.
I'm a licensed certified publicaccountant.
I formerly worked with the IRSin the European stock market and
with over 70 differentbusinesses, spanning over 17
different industries.
My ultimate goal is to help yousave time and money while
building wealth and legacy.
So don't procrastinate until theend of the tax season.

(00:42):
Click the link in thedescription and let us help you
get you from where you're at towhere you want to be.
Now let's jump back into thevideo.
You see, most people don'trealize they're legally
responsible for their taxreturn, even if someone else
prepares it.
That's why that too good to betrue tax professional isn't
worth the risk.
In New York, they call him"themagician" a tax preparer who
made deductions appear out ofthin air.

(01:03):
Rafael Alvarez orchestrated a$100 million fraud scheme
through his tax preparationcompany, filing countless
fraudulent returns.
His specialty?
Creating rental properties thatdidn't exist inventing business
expenses from nothing and makingup capital losses to inflate
refunds.
Meanwhile, in Texas, John Castromarketed himself as an

(01:25):
"international tax expert andlegal professional", even though
he wasn't.
He finished school, but neverpassed the rigorous exams it
took to become a licensed CPA orattorney.
He promised clientssignificantly larger refunds
than any other preparer coulddeliver.
His pitch was simple.
He knew"special deductionsothers missed and he'd split the

(01:45):
extra refund with you".
When clients questioned hismethods, he filed amended
returns without their permissionthat left them owing tens of
thousands to the IRS.
His reward?
Over 15 years in prison and over$275,000 in restitution.
But that's not the worst part.
The clients of these taxprofessionals still owe the tax

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liability plus penalties andinterest.
Many face audits and significantfinancial hardship to this day.
The IRS director of RPO wasquoted saying the following:
"Check credentials, checkhistory, and above all, if it
sounds too good to be true, itprobably is".
Unfortunately, these aren'tisolated incidents.
The U.

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S.
Justice Department had to shutdown a gross amount of tax
preparers last year for fraud,both knowingly with intention
and unknowingly withincompetence.
And that's not even counting theones who got away with it.
Let me show you what these casesrevealed about spotting shady
tax professionals and the redflags most people miss until
it's too late.
You've heard of ghosting indating.

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Well, it happens in taxes too.
These ghost preparers areexactly what they sound like.
They disappear when it mattersmost.
They refuse to sign tax returns,which is actually illegal under
26 U.S.
Code 6695(b).
They make you sign and fileyourself.
They often work only in cash andthey are hard to reach after tax
season.
The IRS identified over 15,000fraudulent returns from ghost

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preparers in four months alone,but disappearing isn't the only
trick in the playbook.
Let's talk about some promisesthat should set off immediate
alarms.
Ever had a preparer guarantee aspecific return before even
seeing your documents?
If so, you should run.
It's like a doctor diagnosingyou before the examination.
Real tax professionals knowevery situation is unique.

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Here's a red flag that mightsound reasonable at first.
I'll take 10 percent of yourrefund as my fee.
Sounds fair, right?
Wrong.
This practice is actually bannedby the IRS under Treasury
Department Circular No 230,Section 10.27(a) because it
incentivizes inflating refundsthrough questionable methods.
And while we're on the topic ofquestionable practices, ever

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notice how some preparers onlyshow up January through April?
Research shows over 60% offraudulent preparers vanish
after tax season.
Real professionals stick aroundbecause tax issues don't take
vacations.
The digital age has brought usnew twists to old scams.
Now, you need to watch forpreparers who ask you to sign
electronically without theopportunity for you to review,

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or who can't or won't show youtheir PTIN, which stands for
their Preparer TaxIdentification Number.
And here's something most peopledon't know.
Under IRS regulation 26 CFR,your preparer must give you a
copy of the entire return beforefiling.
If they don't, they're literallybreaking the law.
After verifying your taxprofessional via the IRS

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directory of federal taxpreparers with credentials, the
link is on the screen and in thedescription your legitimate tax

professional should have (04:46):
a valid PTIN, they should sign
your return with their PTIN,they should provide their IRS
e-file number, they should giveyou copies of everything, they
should be available after filingseason, and if they have a CPA
number, they should providethat.
So what should you do if youbelieve you've already fallen
for a fraudulent taxprofessional?
Report them using IRS Form14157.

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IRS Form 14157 is used to reportsuspected misconduct or
fraudulent activity by a taxreturn preparer.
If you believe your taxprofessional has violated tax
laws, engaged in unethicalpractices or filed false
returns, this form allows you tosubmit a complaint directly to
the IRS.
Remember, the most successfulbarbers aren't just great with
clippers, they're smart withtheir money.

(05:30):
The choice is yours, but theclock is ticking.
Don't let the IRS give you ahaircut you can't style your way
out of.
It's your move, boss.