Tax Guru – Ker$tetter Letter

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Archive for the ‘Fraud’ Category

Banks Encouraging Loan Fraud

Posted by taxguru on May 11, 2020

Whenever trillions of dollars are being tossed around, you can be sure that the scammers and fraudsters will all be out in full force to glom onto as much of that loot as they can.  That should have been obvious to everyone when the special loan programs for the current virus crisis were rushed through Congress. 

Banks have been busy enticing everybody, whether they are eligible or not, to take out these loans and are even calling it “Free Money” because of the promise of tax free loan forgiveness. Banks have seen this as easy money for themselves, and it’s not just openly corrupt banks, such as Wells Fargo, that are doing this.  They have already received billions of dollars for processing these risk-free loans and are still trolling for more borrowers with bogus promises.

Here’s what I wrote as a reply to a client’s email, stating that his banker was encouraging him “to try and get some of the free money everybody else seems to be getting.”

I would be very very careful about taking part in these special loan programs that have been set up to combat the economic slowdown.  Bankers are making billions of dollars in fees for setting up these risk-free loans and are lying to borrowers as to the benefits, such as tax-free forgiveness. 

With all of this new money, people who are being egged on by fee-seeking bankers, are swarming to it like flies to a pile of poop.  This has not been missed by those in power and it is guaranteed that these loan applications and future requests to forgive the loans will be scrutinized even more closely than IRS does with tax returns.  If you were to apply for your loan to be forgiven, they will demand tight documentation of how the loan money was used

I just did a quick internet search and found some Forbes articles that I put into your Qbox folder on this issue.  There will be many more all over the media, as the government increases their examinations and prosecutions and publicizes those who are caught as a scare tactic. 

One big question: after a borrower is busted for illegally participating in one of these special loan programs, will the bankers who processed those loans also be charged with fraud?  My money is on a big fat “No.”  Too many congress-critters are on the banks’ payroll to allow such a thing to happen.  They will pass laws indemnifying all banks from any legal liability from these loans, if they haven’t already done so.  Just like everyone in Congress, I don’t have the time to read all of the legislation that they pass.

Posted in banks, COVID-19, Fraud | Comments Off on Banks Encouraging Loan Fraud

Liberty Tax Service Busted By Feds

Posted by taxguru on December 12, 2019

Since they cater to a completely different kind of clientele than we work with, I haven’t made much effort to keep up with the latest workings of the big assembly line tax prep services.

While the long held stereotype for H&R Block has been that they don’t work as hard to use all of the tricks of the trade to legally minimize taxes for their clients, I had no idea that the guys who pay people to stand on street corners in Statue of Liberty costumes have had an established corporate culture of preparing fraudulent tax returns, as described in this recent news release from the U.S. Dept of Justice:

Justice Department Announces Settlement With Liberty Tax Service

With this heavy scrutiny on their tax prep practices, we can only guess as to how much longer they can stay in business.

It will also be very interesting to see if any of the other big assembly line tax prep services mention these legal problems that Liberty has been having in their ads.  That market is very competitive, so it is entirely possible that one or more of the other companies will contrast themselves as being free of this kind of scandal and government investigation.



Posted in Fraud, preparers | Comments Off on Liberty Tax Service Busted By Feds

Fraud Protection

Posted by taxguru on March 13, 2008

From a reader:

Subject: Kroll’s Top Tips for Tax Season ID Theft Prevention

Hi, Kerry –

Hope this note finds you well.

I’m reaching out on behalf of Kroll Fraud Solutions which just released a great tip sheet on how consumers can protect themselves from identity theft this tax season. I just read your post on Tax Preparer Danger Signs and wanted to share with you as I thought your Tax Guru readers might appreciate the quick refresher course? I’m happy to provide additional information should you need on Brian Lapidus and his tips below. Thanks, Kerry – I look forward to hearing from you.


Rachelle Lacroix

For Kroll Fraud Solutions

Keep Identity Thieves at Bay during the 2008 Tax Season

The U.S. economy may not be the only beneficiary of the recently passed federal economic stimulus package – identity thieves are getting a boost, too. Why? In the wake of the recent IRS announcement that more than 130 million Americans will receive tax rebates this year, identity thieves are using the promise of extra cash to lure Americans into disclosing their sensitive personal information.

These “phishing” schemes can take a variety of forms, the most common of which involves an identity thief who calls or e-mails a consumer pretending to be an IRS employee. The consumer is promised a sizable rebate if they file their taxes early. All the caller needs in exchange is the consumer’s bank account number to deposit the check.

The bad news is that schemes like the one described above are common; the good news is that falling victim to one is avoidable – as long as consumers get smart on the facts and follow the proper precautions.

Below ID theft expert Brian Lapidus, chief operating officer of Kroll’s Fraud Solutions, offers some important advice that every consumer should know about protecting their personal information during tax season. At Kroll, Lapidus oversees a highly-skilled team that includes veteran licensed investigators who meet regularly with IRS agents to stay apprised of emergent tax fraud issues – bolstering the team’s specialized work supporting breach victims and restoring individuals’ compromised identities to pre-theft status.

Preparing your taxes?

  • Beware of phishing schemes. The IRS never contacts consumers by e-mail or phone to request sensitive personal information (SSN, checking account information, etc.). If you receive a phone call or e-mail that you suspect may be a “phishing” scam, file a complaint with the Anti-Phishing Working Group and contact the IRS immediately.
  • Avoid shopping mall kiosks or pop-up preparers who offer to assist you with tax preparation. Considering the amount of sensitive personal information involved in the tax preparation process, you probably don’t want to hand over your files to someone whose experience and background are unfamiliar to you. Ask a trusted friend to introduce you to his/her tax preparer or consult a local CPA association for trustworthy members.

Filing electronically?

  • Avoid using wireless networks. Use of wireless networks means your data is being transmitted over open airwaves, similar to a radio transmission. If not properly secured, data can easily be picked up by an uninvited party.
  • Don’t prepare your taxes on a public computer. Public computers can contain “keylogger” spyware, which records every keystroke including passwords and account information. Keyloggers make it possible for an identity thief to steal any information entered into the computer during your session. Preparing your taxes on a public computer also increases your vulnerability to “shoulder surfers” – individuals who look over your shoulder to observe what you are doing and, more importantly, collect the sensitive data you’re entering.
  • Only keep a record of your tax claims as long as necessary. Thieves can’t steal what you don’t have. Purge the data once the need for it has expired. Suggested guidelines for individual recordkeeping are available online through the IRS at:

Filing by mail?

  • Don’t put your completed claim in an unlocked mailbox for pick-up. Instead, deposit outgoing mail at a post office.
  • Take it one step further and opt for delivery tracking. That way you can be certain that your information has gotten to the IRS safely.
  • Waiting for your tax rebate? Promptly remove mail from your mailbox after delivery. The longer your mail sits in an unsecured mailbox, the greater your chances of it falling into the wrong hands.
  • You may also choose to have the IRS deposit your tax rebate directly into your bank account, further minimizing the risk of theft.

My reply:


That is a very well written and interesting piece.

Do you have a URL where I could link to it from my blog? I couldn’t find it on your website.

Thanks for your help.

Kerry Kerstetter

From Rachelle:

Hi, Kerry -

Great to hear from you!

Unfortunately, this not on our web site at the present time though I
hope you still consider sharing with your readers. If I can help
further, please let me know.


I received this follow-up today:

Hi, Kerry -

Hope all is well. Wanted to quickly touch base with you on Kroll's tax
season ID theft tips. We recently had a
great article in the Wall Street Journal on the topic.
Thanks, Kerry - I look forward to your reply.


I wrote back:


Thanks for the link to that article. It’s very interesting.

I’ve been too busy working on tax returns and extensions to do much reading on the web for the past several days, so I appreciate your passing that along.



You're very welcome, my pleasure!


Posted in Fraud | Comments Off on Fraud Protection