IRS Tax Filing Fraud: A Massive Scale Misconduct by Atlanta based /Hyderabad Tax Filer
This story may be an eye-opener for many people who are working in the USA. Every year we all do tax filing through trusted websites such as Turbotax or through approved agencies such as H&R block, Block advisors, etc. Many Indian employees who are legal immigrants work mostly in Information Technology industries. Almost more than 90% of the employees want to file the tax hassle free, but at the same time with cheap filing fee and no effort from their end except submitting their W2 forms.
Many of the India based tax filing companies who are registered as one of the approved Federal tax preparer through IRS are targeting the above mentioned segment of employees to execute their tax fraud.
Let me explain my experience that happened in March 2020 through March 2021 (12 months journey):
March 2020 (first week) : I have moved from California to North Carolina and also purchased a home in NC. Given the complexity of two states and mortgage in play my regular friend who is also a charted accountant in California advised me to get professional tax consultant to help file my tax. I was shopping around for genuine but local tax preparer. I gave my tax papers to one of the local tax consultant referred by a friend, however, the consultant took more than 3 weeks to prepare the draft and provide me the high level estimates. Meanwhile, first week of March, I got a call from an Atlanta telephone number but someone from India called me stating that they do tax preparation and filing. Since I was busy with personal move and other work, I decided to give my papers to them after verifying their website address and customer reviews posted on their websites. They asked me to sign-up and share all the tax documents through a secured portal.
March 2020 (second week) : After back and forth calls with the tax preparers as well as email exchanges, I agreed on the numbers to file. Following are the indicative numbers for reference,
Federal: I owe $540
NC: I get $2000
CA: I owe $2400
I paid them $240 as their fee.
March 2020 (third week) : After my spouse and I signed form 8879, the papers were filed by them with IRS. As they promised, I got my NC refund within 2 business days into my bank account. As they promised, their team guided me to pay through online for Federal and CA state which I owe money to.
April 2020 (second week) : As every legal tax filer, I was also waiting to receive my economy stimulus check but didn’t receive it. When I checked through IRS Getmypayment portal, it showed that the amount has been direct deposited into account number which was not recognized by me or my family members. I followed up with tax preparer stating the situation but as per their advise, there were some confusion caused by IRS due to which direct deposit going to incorrect accounts for many Americans. Thus, I got furious and started calling my friends, inquiring with my neighbors, reviewing blogs over internet about the stimulus payments. I was convinced with an update from my tax preparer which was aligned with what was going on at that timeframe.
May 2020 (2nd week) : I have received the hard copy letter from Ex-President Trump with details of the economic stimulus package along with details I have noticed in Getmypayment portal. I was furious and anxious. I have contacted my tax preparer and patiently waited for one more week.
May 2020 (3rd week) : I lost my patience and contacted the IRS stimulus helpline highlighted in the letter copy which I received. As expected after almost 45 minutes of wait time on the line was able to speak with an IRS officer. As usual they have verified my details and then started answering my questions. The details provided by the officer were real eye-opening and worth advise for everyone to note,
a) My tax preparer tampered my 1040 Federal return forms. The one which me and my spouse signed has $540 which we owe to Federal but, the 1040 which was filed by tax preparer had a value of $6841 credit back to the bank account which was highlighted in the stimulus check update letter.
b) IRS officers gave me an advise to sign-up in IRS portal and download all the tax transcripts and review. I was not aware about this information. IRS made last 6 years tax transcripts available for every single tax payer.
c) Since my 1040 form was fraudulently changed with incorrect account number (intentionally) this resulted my stimulus payment of $2,900 also directed to that account!! [Total of $9,741!!😭].
c) IRS officers advised me to file 14157 and 14157-A form and officially file a compliant against the tax preparer.
d) Until this call with an IRS officer, I was unaware of the fact that while filing taxes in the 1040 Federal form and every single state return we can have different bank accounts to route the money deposit. My tax preparer was smart here because in the NC filing they have provided my correct bank account in which I got my refund but in the Federal return they have tampered my tax return (with Federal return, we have the option to provide multiple account to route the refunds).
May 2020 (4th week — part 1) : I called my tax preparer and debriefed him about IRS call but, he continued to defend his position stating there was a mistake on IRS side, but refused to accept his mistake. I become so furious and started yelling at the tax preparer and told him that I can consider giving him a last chance if he was willing to accept his mistake, amend 1040, refund $6841 to IRS and settle my stimulus payment but he persisted his position. I have disconnected his call and started calling my well wishers to get some advise. Meanwhile, I contacted my employers provided attorney team (because I had my legal plan part of my benefits) per my friends and attorneys advise, blocked my tax preparers number and initiated communication over an email.
May 2020 (4th week — part 2) : After a couple of days, my fraudulent tax preparer from the Atlanta office responded to my email acknowledging their mistake and were willing to correct their mistakes and resolve this, however it was too late because I almost finished gathering my detailed compliant along with paper work to prove this compliant. In fact, their email response added more strength to my compliant. I faxed the IRS documents through UPS, emailed my compliant to the Department of Treasury as it involved stimulus payment and finally have provided my tip to FBI stating this incident. The tax preparer tried to contact me in several ways but for a change I resisted to talk to them by taking stubborn stand based on my friends and attorneys advise. My compliant essence is as follows, assume there was no stimulus payment then following was the realistic at the same time pragmatic situation is being executed (followed by most of the India based tax filers so BE AWARE and careful)
a) Assume this tax preparer filing the tax for 100 different people
b) For each person they are tampering their 1040 and stealing let say $4000 into their account
c) Many tax filers (some are more greedy) will ask the tax prepares stating they like to get more money in return (meaning credit back from IRS). These tax prepares will manipulate this situation in their favor. These tax preparers will negotiate with clients for certain $ amount return from IRS let say $4000 and then they would fraudulently tamper the 1040 forms and may steal additional let say $2000 from IRS for each client (which the client doesn’t even come to know!)
d) The total fraudulent amount the tax preparer could gain for a given year would be ~ (100 * $2000 = $200, 000). The magnitude of this financial crime is multi-folded and humongous!!
e) As we all know if there was no stimulus payment until people with proper IRS tax transcripts knowledge there is no way to identify this steal & fraud.
June to mid September 2020 : I was researching on means and methods to effectively block my identity from theft. I have enrolled into Lifelock ID protection (which offers limited capability). In this window, I was trying to contact IRS to follow-up on my case but unfortunately no positive response or acknowledgement as IRS was busy with stimulus payment handling
September 2020 (last week) : Received an acknowledgment letter from IRS stating they have received my compliant and they would take 60 days to provide a response on my compliant. Couple of weeks later I received $540 check from Federal because per their internal reconciliation audit, I incorrectly paid because as per IRS records they should’ve paid me $6840! 😔😭
November 2020 (first week) : Received a response from IRS asking further documentation and proofs. IRS have asked two documents — a) 1040 which was intended to file b) letter from financial institution stating I have no connection or relationship to the account mentioned in the tampered 1040 form which was filed by tax preparer. IRS did mentioned complete details about the bank account in which $6841 and my stimulus $2900 got deposited. I approached my bank by walk-in and surprisingly the bank manager was astonished 😧 😮 he asked “is it humanly even possible?”. He was very kind and helped me asking questions and called their customer care and sorted things out for me. I collected the letter of proof next day morning to respond to IRS.
November 2020 (second week) : Have responded with proofs and other supporting documents to IRS. I was trying to contact the direct line mentioned in the letter to follow up for any questions or check the status of my compliant but I was not successful not even once talking to the officer mentioned in the letter. Was going through so much stress because of these dramas. As we all know entire country was getting ready for the election hence couldn’t able to get proper response from IRS office. Wait continues..
December 2020 : I got mixed messages from my colleagues and friends about 1040 amendment. Few told me to wait until compliant is resolved by IRS some told me to take help from H&R block or Block advisors to amend 1040. I went to Block advisors and submitted my papers. They refused to accept the application to take any action given the complexity. I don’t have any other choice other than waiting to hear back from IRS.
March 2021 (first week) : One of my friend told me the trick on how to talk to IRS real person. I called the direct line to the officer without an extension. As expected after 40+ minutes wait got someone on the line to talk to. Finally, got some positive response from IRS, my compliant investigation is going on and they would send out a detailed letter with action taken and next steps over mail in few days.
March 2021 (second week) : Received much awaited letter from IRS. Following were the key updates provided in that letter,
a) My tax records for the filing year 2019 has been updated what was originally intended.
a) The stimulus which I have missed could be claimed through recovery rebate credit in 2020 tax filing
b) Compliant is under investigation and they can’t disclose what exact action being taken against the tax preparer due to confidentiality (which I don’t understand because I am the one who suffered a lot. I do believe I deserve to know what is going and what action has been taken against the fraudulent tax preparer😭)
Summary / takeaway learning from my experience:
#1. Never go for unknown tax preparers particularly if they are operating outside of the US because they are generally inexpensive and they would get you lot of money from IRS
#2. As an educated and qualified IT professional, I learnt that we can and should file taxes through online by investing 4 to 5 hours
#3. If there are complexity in your returns in terms of investment portfolio, mortgage, W2s, multi-state, etc. then consult with local and trustworthy tax professionals for preparing & filing
#4. Always download the tax transcripts every year and validate the numbers irrespective whom you are filing the tax returns to verify and make sure.
#5. Unfortunately per my research and analysis the owner of this company is a Federal employee (I don’t want to expose the owner of this company through this blog hence not providing the name however you could download the approved tax prepares from IRS website and find out the details in case if you are interested) and the company is registered based out of Atlanta address.
#6. Finally am not sure whether I can file a lawsuit against that tax preparer or not, given the mental agony I have gone through (any tips on this would be really appreciated)
Hope this is helpful and spread this awareness so that people are aware of these kind of frauds and vigilant not to fall for these traps which may impact someone’s legal stay in the country or their long term dream to stay in the country.