Tax Schemes: How to identify and refer abusive tax promotions and promoters
WOMAN: [ Thinking ] This looks like the same issue on a bogus Schedule C by the same preparer I dealt with before.
I wonder how many returns this preparer did with the same type of issue.
This could be a big problem.
I wonder who I can talk to about this preparer.
Hey, Mr. O.J.I., I need your help.
I think I have an overevaluation situation and a possible promoter scheme.
O.J.I.: You may be right.
This appraiser looks very, very familiar.
WOMAN: Could this be a tax scheme?
You think someone is promoting a scheme and referring taxpayers to the same appraiser?
What should I do next?
Who should I call?
O.J.I.: The Lead Development Center.
HICKS: Hi, I'm Shenita Hicks, Director of SB/SE Exam.
If you have information regarding a potential abusive transaction or a tax scheme, contact the Lead Development Center, also known as the LDC.
The LDC approves SB/SE and TEGE investigations of return preparers and promoters of abusive tax schemes.
Skilled agents provide assistance to examiners, working promoter and preparer investigations.
The LDC receives referrals from both external and internal sources.
The LDC relies on examination personnel to identify and refer potentially abusive transactions and emerging issues.
Employees may send referrals by regular mail or by e-mail to [asterisk]LDC on Outlook.
Through the hard work of IRS examiners from all over the country, there have been many successful investigations of abusive tax scheme promoters and return preparers.
These investigations have resulted in numerous court orders and injunctions.
For example, a Midwest federal court permanently barred an ex-IRS criminal investigator and associated companies from preparing federal tax returns for others.
A Southeast-area abusive-transaction group worked 20 first-time home buyer credit investigations in conjunction with the Return Preparer Initiative.
Within three months, they forwarded five referrals to the Justice Department and secured three permanent injunctions during the April 2010 filing season.
Another preparer from the Northeast marketed "large, fast refunds" and targeted low-income, non-English-speaking clients.
He concealed his identity by using more than 70 Electronic Filing Identification Numbers.
The preparer was permanently banned from practice before the IRS.
Many of these individuals also face monetary penalties and jail time.
The widespread nature of the types and locations of these investigations show we cannot let our guard down when it comes to protecting the public from the unscrupulous practices of a few individuals.
The LDC Website includes guidance to make a referral, frequently asked questions, and answers, about the LDC, and contact information for the LDC staff who can assist you.
Remember the e-mail address, [asterisk]LDC, and add the LDC Webpage to your favorites.