NORTH LIBERTY- It can happen to anyone- even the experts.
After 20-plus years of experience as a certified professional accountant (CPA), Jennifer L. Palmer wasn't too shocked when she became a victim of tax return identity theft.
"The bad guys are getting more sophisticated and smarter," she said. "It's very lucrative and very organized crime."
Palmer- who has served the North Liberty community since 1995- said while there's not much one can do to avoid falling prey to these criminals, there are some precautionary measures to be taken.
"Don't make it easy for them," she said. "Protect your identity numbers. Don't carry your social security card. Anything with personal information on it, don't just throw it in the trash; shred it."
In order to file fraudulent tax returns, individuals are stealing social security numbers and birthdays and filing false taxes while claiming multiple children to receive the earned income credit, Palmer explained.
"The people committing the fraud have probably bought their list from somebody, but the lower-level criminals gathering this information, they're breeching computer systems, going through garbages. Then they sell them to people doing the thievery," she added.
According to the U.S. Government Accountability Office's (GAO) most recent analysis of Internal Revenue Service (IRS) data, 12 percent, or $3.1 billion, of fraudulent returns were paid in 2014. Of the total $25.6 billion attempted, 88 percent, or $22.5 billion, was prevented or recovered by the IRS. The GAO noted that due to difficulties in knowing the amount of undetected fraud, actual amounts could differ.
If you suspect you've become a victim of tax-related identity theft or you receive a notice from the IRS, Palmer stressed the importance of filing an identity affidavit as soon as possible.
"You'll have to file a paper return because it's already been done electronically," she noted. "And if you have a refund, you'll have to wait for it."
While the IRS has upped its game by limiting electronically deposited refunds into a single bank account or pre-paid debit card to three, the agency can't catch them all.
And sometimes, Palmer noted, they make mistakes.
"The IRS isn't always right," she said. "If you get a notice, take it to a professional. Don't just pay it. Those notices are kicked out by a computer automatically. Human eyes don't see the purpose for the notice, and the computer isn't always right."
She remembered a client who one year received a notice to pay $16,000 due to an IRS computer error regarding 2008 flood assistance. Instead of spreading the taxable income over three years, the computer had interpreted the amount as a one-year chunk.
"You don't know if they're right or not, so you don't just want to pay it without checking it," she added.
Many times, however, an IRS notice is the result of a user mistake- especially when one does his or her own taxes, Palmer said.
"You can read the instructions, but if you don't understand the impact of different choices that are there, you might not pick the best one for you," she added.
According to the IRS, common filing mistakes are checking the wrong exemption boxes, entering names and numbers incorrectly, and choosing multiple filing statuses.
There's still hope if you've messed up, Palmer said.
"If you write a letter and explain what happened: I'm sorry, I'm fixing it, I'm hiring a professional, it will never happen again. Those three things, you can get out of penalties if it's a first-time offense," she said. "Although you still have to pay interest."
Palmer is more than happy to help her clients with mistakes, but she'd prefer they come to her or another professional to ensure it's done right the first time.
And she's an enthusiastic number-cruncher through and through.
"I love playing with numbers," she said. "When tax season's over, I'm ready for it to be over because I'm stressed, but I still love playing with the numbers. That's just the cycle I live with because this is what I do. It's the gift God gave me and my passion."
Palmer, who started home-based J.L. Palmer, CPA from scratch after leaving a firm in Washington, Iowa, serves clients from the North Liberty area and beyond. Although she mostly does small business bookkeeping and payroll, her services range from business consulting to accounting software implementation.
And, of course, income taxes come tax season.
"Each client's different," she said. "Their needs are different. Their abilities, their patience, what they even want to do is different. However the client wants to go about it, I'll try to work with them.
"It has to be done right," she added. "That's my rule."
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