Estate Planning attorneys may come across scams that their clients may be involved in, wittingly or unwittingly. It’s important that we are up on the latest scams to protect our clients and ourselves. Here are some of the latest scams reported by the IRS:
Return preparer fraud. Tax return preparers have access to sensitive, personal financial information. Especially if your client is using a tax preparer other than an attorney, CPA, or enrolled agent, keep your eyes open for potential fraud.
- The IRS is on the lookout for people who hide their income offshore. Offshore income is not a problem, but hiding it is. U.S. citizens and residents must report all income worldwide. If offshore entities are involved with debit cards, foreign trusts, etc., be on alert! There may be tax fraud going on.
- Phishing affects even the IRS. Phishing is the unscrupulous attempt to get private financial information by pretending to be a bank or even the IRS. The IRS never contacts taxpayers through unsolicited e-mail. If your client receives an unsolicited e-mail the IRS, it’s an attempt to defraud them.
- Some taxpayers file false returns in order to get tax “refunds” to which they are not entitled.
- Improper deductions. Taxpayers at times will claim deductions which are improper, especially charitable deductions. While an attorney does not have a duty to investigate every item for the IRS, if it smells funny, don’t be involved.
- Tax schemes. We have all had clients who have come to us asking for our help implementing the latest craze in tax avoidance. Don’t get sucked in as an accessory or co-conspirator.
- Abuse of charitable entities. At times taxpayers want to set up a private foundation or other charitable entity and then use it only for their own benefit, giving their family scholarships and engaging in self-dealing and other “private inurement” transactions. Be careful, watch your step, and pay close attention in this area—the IRS is!
Be alert for these scams to protect your client and yourself.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys
Direct Line: (858) 300-4739
Latest posts by Steve Hartnett (see all)
- Reasons an Estate Plan Could Be Challenged: Part 4 – Lack of Testamentary Capacity - December 10, 2019
- Reasons an Estate Plan Could Be Challenged: Part 3 – Fraud - December 3, 2019
- Reasons an Estate Plan Could Be Challenged: Part 2 – Undue Influence - November 26, 2019