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Slip into a Cell

In February, the IRS released its Dirty Dozen Tax Scams for 2012. One of the scams is called False Form 1099 Refund Claims:

In this ongoing scam, the perpetrator files a fake information form, such as a Form 1099 Original Issue Discount (OID), to justify a false refund claim on a corresponding tax return. In some cases, individuals have made refund claims based on the bogus theory that he federal government maintains secret accounts for U.S. citizens and that taxpayers can gain access to the accounts by issuing 1099-OID forms to the IRS.

Don’t fall prey to people who encourage you to claim deductions or credits to which you are not entitled or willingly allow others to use your information to file false returns. If you are a party to such schemes, you could be liable for financial penalties or even face criminal prosecution.

Today we meet Ronald L. Brekke. Last Thursday, Mr. Brekke was convicted of conspiracy and wire fraud. Promoting the “1099 OID” fraud, Brekke assisted nearly 1,000 people claim over $763 million in fraudulent tax refunds by preparing bogus tax forms on their behalf. Mr. Brekke had told prospective clients at a seminar that “some of the filings would slip through resulting in a big payout for some of the filers.”

When a tax preparer uses the words “slip through” during a seminar on tax preparation, you probably want to slip out of the seminar immediately and not look back.

Mr. Brekke faces up to 20 years in prison. His sentencing is scheduled for June 15, 2012.

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