As tax season ramps up, “ghost preparers” are busy scamming taxpayers. Ghost preparers are unethical tax return preparers that prey on people not through intimidation, but through trust. Federal law states anyone who prepares or assists in preparing federal tax returns for compensation must have a valid 2020 Preparer Tax Identification Number (PTIN) before preparing returns.
What is the difference? Is tax fraud a crime? Can you go to prison?
Fraud is obtaining something of value from another by deception. Tax fraud occurs when a taxpayer commits or avoids certain acts with the intent of evading taxes owed. For tax fraud to occur, both intent and a tax due and owing are required. Deceit, subterfuge, camouflage, concealment or obscuring events to appear as something other than their true nature are key ingredients in tax evasion.
Can you deduct a bad debt? Yes, if it is a business bad debt and a non-business bad debt under certain conditions. A business bad debt occurs when the debt was created or acquired in a trade or business closely related to your pre-existing trade or business and it becomes partially or totally worthless.
You must file IRS Form 730 and pay taxes on wagers if you: • Are in the business of accepting wagers (this form is NOT for individuals placing wagers, it is for entities accepting wagers). • Conduct a wagering pool or lottery. • Are required to be registered and you received wagers for or on behalf of another person but didn’t report that person’s name and address. Even is you are an exempt organization i.e. 501 or 521, you are generally not exempt from the tax on wagering or the occupational tax, accordingly you must file.