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Southbourne Tax Group Review: How to make sure your personal finance is on the right track

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Southbourne Tax Group Review: How to make sure your personal finance is on the right track

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Being on track with your finances can bring a feeling of satisfaction and content. But this is not possible without any hard work and discipline. Each of us desires a stable financial situation but sometimes things don’t fall into their rightful place, thus problems arise. One can’t avoid financial problems, how you face them is the real issue. You should be able to bring back your personal finance on the right track after some financial problems.

First, you must learn. You need to have a good knowledge about personal finance to know which way to go on your finances. Don’t fall into a huge debt and take your financial situation on the right track with the following simple tips provided by the The Southbourne Group with the help of a few financial experts as well.

Develop a better understanding today

If you are one of those young readers, you should begin working out your personal finance today. Learn its basics and consider opening a savings account. Grow it, build it, save it! Your future’s financial condition will surely be secured by growing your savings. You can also make smarter financial decisions later in your life if you learn to save early.

The Southbourne Group also wants those parents reading this to teach their children on how to make proper financial decisions with regards to their own money. This way, they would be more careful about spending their money, making them smarter in creating financial decisions than others.

Know what’s in your paycheck

With a little knowledge about your paycheck, you might be surprised with some disappeared amounts even though you didn’t spend them. Notice important details on your paycheck and understand each of them such as your national insurance contributions, pension contribution, student loan payments and tax code.

Basic needs should be your priority

Just take a look at this quote: “If you buy things you do not need soon you will have to sell things you need.” Take a deep breath and think twice before buying other expensive things that will make you forget about your basic needs. Make sure that you’ll always pay your house rent, bills, foods and tax first before anything else.

Make a good financial record

Make one if you still don’t have any financial record. But if you currently have one then see to it that you update it with details organized properly to guarantee the balance between your income and spending. Doing this could also ensure that you’re still within your set budget.

Grow a savings account

As mentioned earlier, building a savings account can greatly help your financial future, thus the company of Southbourne Tax Group inspires each reader to save their own money, especially the young ones. Grab the best deals available where you can also depend on comparison sites in finding them.

Plan your goal

Defining a financial goal will inspire you to do your best in building your savings. Don’t give up on your goal and always find a way to keep your personal finance on track.

Always apply the appropriate knowledge and attitude to make sure your personal finance is on the right track. How you take care of personal finance today will define your future financial situation. Southbourne Tax Group provides those mentioned above with the hope of helping you in your finances.

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Southbourne Tax Group Review: How to steer clear of huge debts

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Southbourne Tax Group Review: How to steer clear of huge debts

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Southbourne Tax Group sought the wisdom of some financial coaches regarding staying out of debt and with their collected data the team will provide imperative guidelines to help you with your finances and to avoid falling into a huge debt or even hitting financial rock bottom.

The financial coaches all possess great traits and are all very good in doing their job but to the surprise of the Southbourne team, a few of those experts hit rock bottom already, but their ability to bring back again their personal finance on the right track is really admirable.

Getting your way out of debt requires commitment and dedication. And to spur people to reach their financial goals, those experts The Southbourne Group converse with decided to become financial coaches, so that they could beget inspiration to other people by sharing their own stories and struggles as well.

Take control

Bear in mind that you need to take control of your finances not tomorrow, but today. Don’t wait for your rock-bottom moment, but instead try your best to avoid it each day. Even if it seems everything is fine now and you can pay all your debts, does not mean you should ignore the possibility of falling hard on your finances. Always follow a strict budget and manage your money properly with a disciplined attitude.

If there are certain changes in your life like your partner losing his or her job, or from having a full-time job to a part-time job, you must conduct some changes as well on your part and adjust your financial lifestyle.

If you notice you are being out of control on your personal finance then you should face the problem instead of giving it a cold shoulder. Don’t blame others for facing financial challenges in your life because you’re the one responsible for it, but instead, start turning your financial life around.

Aim for financial freedom

Each of us holds different meaning to financial freedom, but let’s just say financial freedom entails “earning enough money and building the mental discipline to keep that money from controlling you” as Scott Young said. Those who are having a hard time on their finances should begin their journey to financial freedom today.

Examine your attitude towards money and begin from there. Don’t make huge spending then only depend on your belief that if you win the lottery, you could pay all those expenses - don’t make such excuses. When you find yourself trapped, avoid having a negative mindset and telling yourself there’s no way to solve your problem. Get up and find a solution because “there was never a night or a problem that could defeat sunrise or hope.”

As mentioned earlier, don’t think negative thoughts if you are currently having a bad financial situation because that could only worsen the problem, but have an optimistic mind instead. Start turning your personal finance around by planning and setting a good budget because it is imperative to know exactly where your each cent is going.

Money isn’t everything

Yes, you should be responsible for reaching your financial goals but at the same time, you’re a human being that also needs to build good relationships with other people and create wonderful experience and memories with your family. Don’t be a money-machine that forgets how to love and live.

Don’t add more debts

Always remind yourself not to incur any more debt, which can later develop to a mental discipline to keep you away from debts. Be committed once you start your journey to be debt-free since there’s always this “temptation” to add more to your debts. To avoid this, you need to have a stronger disciplined mindset.

The Southbourne Group needs you to remember that “there’s no easy, magical formula when it comes to getting out of debt. It takes a lot of time, hard work, and discipline.”

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Southbourne Tax Group Review - How to steer clear of huge debts

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Southbourne Tax Group Review: How to prevent making your personal finance worse

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Southbourne Tax Group Review: How to prevent making your personal finance worse

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“Personal finance is about 80 percent behavior. It is only about 20 percent head knowledge”. At the end of the day, your personal financial life really depends on how you handle your money. It is very important to be in control and be organized on your own money since you are the one responsible for every cent you earn and spend. And you’re the one who will face the consequences of your own actions towards your money.

Handling your financial life should also include understanding the basics as well as the important aspects of personal finance. Educating yourself on such matter is a vital part of developing a good financial life. Southbourne Tax Group doesn’t want your personal finance to become worse. With the following advice, the team expects you to learn some important elements and use them to avoid having a bad financial life. They gathered different advice and tips from different research, added with some financial wisdom from a few experts.

Start ASAP

It seems like you’re being rushed but that’s not the case, Southbourne Tax Group only wants you to consider starting building your personal finance today. While you are still young, you should learn about personal finance and begin saving money as well. To those parents reading this, know that teaching your children about the basics of financial management can help them better handle their own money now and once they got older. Doing this, you can learn some new things too while giving your children the necessary financial guidance.

To young readers, understand that having a good personal finance at your age could result to a better financial life later. Open an account and save your money. Indeed, buying very expensive things can satisfy you for a while but it is much better to have a bountiful savings account than owning luxurious things that will eventually worn-out or get some damage. Put in mind that “studies show that people who learn to save early in life usually make smarter financial decisions later”.

Comprehend the details in your paycheck

Unknowing the other details included in your paycheck may leave you at shock once you receive it because of some amount disappearing without you even spending them. Understand better the national insurance contributions, pension contribution as well as the student loan payments and tax code.

Vital things first

It is part of being a responsible individual to make sure that you satisfy all your basic needs, from food, water, and clothing to shelter. Make certain that you’re up to date in paying your house rent, bills, foods, and tax.

Keep a good income and spending record

If you currently have a record, continue to update it and make sure you organize every detail properly. Make one if you still don’t have any financial record. You need to ensure that your income and spending are balanced. Don’t forget to follow your set budget as well.

“Save money and money will save you”

Growing a savings account should be a part of life. And part of it is getting those best deals as well. You can find the best offers easily by exploring comparison sites. Make some time to do your research.

Set a goal

Set a goal that makes you want to jump out of bed in the morning. Picture yourself achieving that goal every day while doing your best on your job, plus challenge yourself every day to do better and be better. “Save your money because you’re going to need twice as much money in your old age as you think.”

Do you still have lingering questions in your mind? Don’t be afraid to voice them out, Southbourne Tax Group is always ready to listen and give solutions on your financial predicaments, especially when it comes to taxes.

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Southbourne Tax Group Review - How to prevent making your personal finance worse

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Southbourne Tax Group Review: How to prevent huge mistakes on your personal finances

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Southbourne Tax Group Review: How to prevent huge mistakes on your personal finances

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“The more disciplined you become, the easier life gets”. Southbourne Tax Group agrees that discipline is the key to having a better outcome in every aspect of life. Financial education is not an exception since it also needs your discipline.

In order to have a good and better financial life, a person must educate himself about personal finances and must apply discipline in handling money to prevent huge financial mistakes. Many studies had also shown that personal financial education is essential nowadays in the society.

Better management of personal finances could be learned with this short read provided by Southbourne Tax Group, which includes helpful tips gathered by the team from their careful research. The following are also made with the guidance of some experts.

Start now

If you are one of those young adults, learning about your finances and saving money must be done as soon as possible or if possible, begin now. Southbourne Tax Group aims to beget to individuals the importance of financial education to children as well. They should be taught significant financial information once they start their schooling. Educating a child at home is also recommended to those parents reading this. You might learn something new while supporting your child to manage their own money.

At an early age, one can build a stable financial foundation by understanding personal finances as well as growing a savings account. This is a strong testament to the favorite financial quote of many people: “Studies show that people who learn to save early in life usually make smarter financial decisions later”. If you’re a person equipped with a substantial amount of information on handling finances, you can apply that learning to make the right decisions that can lead to a better financial life in the future.

To give a scenario, we have two individuals who are 25 years old and 35 years old respectively. Both began putting the same amount of money on their accounts for a lot of years. When both reached the age of 65, it’s clear that the 25-year-old acquired double the amount of the 35-year-old’s money due to the accrued interest.

Be familiar with the details included in your paycheck

Shocked with some amount disappeared on your paycheck, and your chance to even spend them gone into thin air? You don’t need to be in such situation if you understand properly the things included in your paycheck. Understand the national insurance contributions, pension contribution, student loan payments, and the tax code as well.

First things first!

Make sure to settle first your basic needs such as food, water, clothing, and shelter. Ensure to pay your house rent, bills, food and of course, tax.

Assess your income and spending

After a careful assessment of your income and spending, you should then work out on balancing both.  Southbourne Tax Group and other financial teams recommend keeping a proper record of your spending. This way, you can ensure you’re still following your set budget.

Savings, savings, savings

Working out your savings is clearly included in this short read. It would be nice to get the best deals for your savings too since you’d want the best for your hard-earned money, right? Dig into the World Wide Web and do your research, comparison sites can be a good guide to finding the best deal as well.

Set a goal

You’re saving for a specific goal, right? Having a goal to achieve makes you more inspired to put more effort in your work. Always picture your goal in your mind and make sure to make it into reality in the near future.

Should you require any assistance with your taxes and finances, or have any questions, please don’t hesitate to contact the Southbourne Tax Group. They are more than ready to help you.

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Southbourne Tax Group Review - How to prevent huge mistakes on your personal finances

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Sinds haar oprichting, al Southbourne Tax Group levert vertrouwde belasting dienst aan verschillende bedrijven en particulieren. En het geven van hulp aan huis beleggers de onderneming bereid enkele nuttige tips die ten minste belastingen gemakkelijker maken kunnen voor hen en om hun belasting-zorgen. Maar eerst, vergeet niet dat als een belegger, je moet een juiste BTW-aangifte.

Bij het indienen van rendement, komen verhuurders meestal onder controle dus het is echt belangrijk dat volledige en passende fiscale aangiften. Zorgen over de legitimiteit van alle claims en het maximaliseren van de belastingaangifte bedrag omvat een grondige discussie met uw accountant over wat kan en niet kan worden geclaimd als een kosten fiscaal aftrekbaar.

Belastingen gemakkelijker voor u kan ook inhouden het inhuren van een fiscaal specialist. Southbourne Tax Group biedt een paar meer tips hieronder om te helpen vastgoedbeleggers met hun belastingen.

Vermindering van uw belasting te betalen kan onder meer het nettoverlies gegenereerd door negatieve gearing tegen andere inkomen te compenseren. Ook kunt u het belang van een eigenschap aanspraak maken als het is beschikbaar voor huur.

Controle van uw verzekering omvat tevens de juiste dekking hebben. Als een verhuurder, moet u weten dat een standaard verzekering huis en inhoud zal niet betrekking op bepaalde risico's verbonden aan de eigenschap investeren hebben. U zeker kosten die terecht heb je recht op, dus ervoor zorgen dat u niet zal vergeten.

Werken vanuit huis als zelf beheren verhuurder had kosten waarin u aanspraak op een redelijk deel van het maken kunt. Southbourne Tax Groupstelt ook voor een manager van het bezit inhuren omdat haar kosten kan een aftrekbare kosten, dat een goede zaak, juiste is?

Managers van het bezit hebben de mogelijkheid om een potentiële fiscaal voordeel terwijl het bijstaan van de organisatie zo goed maken. Een vastgoedbelegging omvat administratieve verantwoordelijkheden, die goede verzorging managers van het bezit genomen kunnen worden. Problemen met compileren en de voltooiing van belangrijke papierwerk? Een manager van het bezit kan inderdaad zorgen voor een grote hulp in deze kwestie en het gemakkelijker en eenvoudiger voor u te maken.

Al die gegeven tips hierboven zijn enkele van de manieren om te voorkomen dat fouten op uw belastingen te maken als een belegger. Voor meer informatie over belastingen, contacteer Southbourne Tax Group vandaag.

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Southbourne Tax Group Review: How to make taxes easier as a property investor

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Southbourne Tax Group Review: How to make taxes easier as a property investor

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Southbourne Tax Group has been a part of different projects that includes tax services to various businesses and individuals. Since its beginnings, the firm has been showing unrivaled commitment to their clients and giving them necessary guidance with their taxes.

Southbourne Tax Group targets to provide help specifically to property investors with this post. A few tips will be provided that can make taxes at least a bit easier to individuals or businesses. But first, as a property investor, remember to have a correct tax return.

As mentioned earlier, having an appropriate and complete tax return is indeed crucial for property investors since they often come under inspection when submitting returns. Call your accountant today and talk about important tax matters and define what can and can’t be claimed as a tax deductible expense.

Hiring a tax specialist is one of the recommendations of Southbourne Tax Group to help you make your taxes easier. Offsetting the net loss from negative gearing against other income can reduce your tax payable. Claiming the interest of a property is also plausible if it is available for rent.

Always confirm if you have the right coverage when checking your insurance policy. Experts add that a standard home and contents insurance policy won’t cover specific risks included in property investing. Make sure that you will never forget the costs you are rightfully entitled to as well.

As a self-managing landlord working from home, you surely have some expenses and such costs can be claimed as well but only a fair and reasonable part of it. On the other hand, Southbourne Group also recommends getting the service of a professional property manager because its costs can be a deductible expense too.

Moreover, a property manager can assist the organization while creating a potential tax benefit. Such professional can also handle very well the administrative responsibilities involved in an investment property. Completing and compiling paperwork are no problem to property managers as well.

Mentioned above were only some of the basics to make your taxes easier as a property investor, Southbourne Tax Group encourages you to contact them for further guidance.

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Southbourne Tax Group Review: How to avoid making mistakes in your taxes as a property investor

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Southbourne Tax Group Review: How to avoid making mistakes in your taxes as a property investor

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Since its foundation, Southbourne Tax Group has been providing trusted tax service to different businesses and individuals. And to give some help to property investors the firm prepared some helpful tips that can at least make taxes easier for them and to reduce their tax-worries. But first, remember that as a property investor, you must have a correct tax return.

When submitting returns, landlords usually come under inspection so it is really important to have complete and appropriate tax returns. Ensuring about the legitimacy of all claims and maximizing tax return amount involves a thorough discussion with your accountant on what can and can’t be claimed as a tax deductible expense.

Making taxes easier for you may also involve hiring a tax specialist. Southbourne Tax Group provides a few more tips below to help property investors with their taxes.

Reducing your tax payable could include offsetting the net loss generated by negative gearing against other income. You can also claim the interest of a property if it is available for rent.

Checking your insurance policy must also include having the right coverage. Being a landlord, you should know that a standard home and contents insurance policy won’t cover particular risks involved with property investing. You surely have costs that you are rightfully entitled to, so see to it that you won’t overlook them.

Working from home as a self-managing landlord had costs wherein you can claim a fair and reasonable part of it. Southbourne Group also suggests hiring a property manager because its costs can be a deductible expense, which is a good thing, right?

Property managers have the ability to create a potential tax benefit while assisting the organization as well. An investment property includes administrative responsibilities, which can be taken good care of property managers. Having a problem with compiling and completing important paperwork? A property manager can indeed provide a great help in this matter and make it easier and simpler for you.

All those given tips above are some of the ways to help you avoid making mistakes on your taxes as a property investor. For more information about taxes, contact Southbourne Tax Group today.

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Southbourne Tax Group Review: How to properly handle your taxes as a property investor

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Southbourne Tax Group Review: How to properly handle your taxes as a property investor

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For many years, Southbourne Group has been involved in giving a dependable tax service to businesses and individuals, thus it aims to give helpful tips especially to property investors through this article. And as their first friendly reminder, it is really important to have a complete and correct tax return as a property investor.

A complete and right tax return is essential for landlords because they often come under inspection when submitting returns. Keep in touch with your accountant to discuss matters regarding on what can and can’t be claimed as a tax deductible expense. This way, you can make sure about the legitimacy of all claims, as well as maximized tax return amount. Southbourne Tax Group also suggests hiring a tax specialist because one can be of great help in making your taxes easier. Don’t stop reading because more tips are provided below.

Offsetting the net loss generated by negative gearing against other income could reduce tax payable. As a landlord, you can claim the interest if a property is available for rent, however, if the given situation is that a property is lived for half a year and then leased as a holiday rental for the other half, you can’t claim the interest for the full 12 months.

See to it that you have the appropriate coverage when checking your insurance policy. Experts also said that a standard home and contents insurance policy won’t cover certain risks included in property investing. You surely have costs you are rightfully entitled to, so make sure not to forget them.

If you are one of those self-managing landlords, you surely have costs from working at home, and the good thing is that you can claim a reasonable part of them. It’s also a good option to hire a property manager because its costs can be a deductible expense.

Moreover, property managers can build a potential tax benefit while assisting the organization at the same time. They are also capable of taking good care of the administrative responsibilities included in an investment property as well as compiling and completing significant paperwork.

Handling your taxes properly can help you avoid huge problems on your taxes and as a property investor, Southbourne Tax Group hopes that those mentioned above gave you even a bit of help.

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Southbourne Tax Group Review: How to steer clear of tax-time stress as a property investor

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Southbourne Tax Group Review: How to steer clear of tax-time stress as a property investor

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As a property investor, having appropriate and correct tax returns is imperative. As a company who exerts brilliant dedication on providing tax services to businesses and individuals, Southbourne Tax Group prepared some simple tax tips to property investors in managing their taxes.

Landlords often come under inspection when submitting tax returns, thus it is essential to have a complete and appropriate returns. Contact your accountant and discuss important tax matters to identify what can and can’t be claimed as a tax-deductible expense. You can ensure all claims are legitimate and the tax return amount is maximized with this.

Making your taxes easier is possible with the help of a tax specialist, so better get their professional service today. Below are more tips provided by Southbourne Tax Group.

Reducing the tax payable involves offsetting the net loss generated by negative gearing against other income. If a property is available for rent, then as a landlord, you can claim the interest, but if for example, it is lived for half a year and then leased as a holiday rental for the other half you can’t claim the interest for the full 12 months.

Make sure that when checking your insurance policy, you’ll have the appropriate coverage. With a standard home and contents insurance policy, experts said that landlords won’t be covered for particular risks involved in property investing.

Surely, you have costs you are rightfully entitled to, so make sure you won’t forget them. As said earlier, consulting your accountant regarding what can and can’t be claimed before submitting your claim is vital.

Being one of those self-managing landlords, having costs from working at home is usual, but don’t forget that you can claim some of them. But remember you can’t claim all the costs included from working at home such as buying a computer or the monthly internet bills, however, a reasonable part of this may be deductible.

Hiring a property manager also provides great help. The costs included in getting their services can be a deductible expense. They can help you save time because they can create a potential tax benefit while assisting the organization as well. Taking good care of the administrative responsibilities involved in an investment property is easy for them. Compiling and completing important paperwork? A property manager can handle them.

Tax-time stress is often inevitable but with those mentioned above, you can steer clear from major tax-time stress as a property investor. Keep in touch with Southbourne Tax Group to understand this subject better.

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Southbourne Tax Group Review: How to reduce your tax-time burden as a property investor

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Southbourne Tax Group Review: How to reduce your tax-time burden as a property investor

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Submitting your tax returns properly and correctly is crucial as a property investor. Southbourne Tax Group, as a company committed to giving help to people with their taxes, prepared the following simple tax tips to provide property investors some guidance in handling their taxes.

Having completed and appropriate returns are really important because when submitting tax returns, landlords usually come under inspection. One of the things that Southbourne Tax Group needs you to do is to consult your accountant to identify what can and cannot be claimed as a tax-deductible expense. This way, you can make sure that all claims are legitimate and the tax return amount is maximized.

Getting the professional service and advice from a tax specialist will make your taxes easier as well. Southbourne Tax Group suggests continuing reading to learn more tax tips.

First, in order to reduce the tax payable, offsetting the net loss generated by negative gearing against other income is suggested. As a landlord, you can claim the interest if a property is available for rent, but you can’t claim the interest for the full 12 months if that is lived for half a year and then leased as a holiday rental for the other half.

Second, it is important to ensure having the right coverage in checking your insurance policy. Experts also said that landlords won’t be covered for certain risks included in property investing with a standard home and contents insurance policy.

Third, do not forget to claim the costs that you are rightfully entitled to, said Southbourne Tax Group. As said earlier, it is really important to discuss and confirm with your accountant first on what can and cannot be claimed before submitting your claim.

Fourth, you can claim the costs of working from home if you are one of those self-managing landlords. However, not all costs can be claimed such as buying a computer and the monthly internet bills, but a fair amount of this can be deductible.

Lastly, hiring a property manager and the costs involved in it can be a deductible expense too, plus they can be very helpful to you. Hiring a property manager can help you save time because they can create a potential tax benefit while also assisting with the organization at the same time.

Getting the services of a trusted property manager can help reduce your burden during tax time since they can take good care of the administrative responsibilities involved in an investment property, along with compiling and completing important paperwork.

Reducing your tax-time burden could include different factors and some of which were discussed in this post. Southbourne Tax Group can provide a helping hand if you need more tips or advice, just give them a call today and witness their professional tax service.

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Southbourne Tax Group Review: How to avoid doing taxes wrong as a property investor

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Southbourne Tax Group Review: How to avoid doing taxes wrong as a property investor

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Property investors should know how important it is to settle their tax returns correctly. The following are some tax tips prepared by Southbourne Tax Group to help you avoid having errors on your taxes.

When lodging tax returns, landlords usually come under inspection from the government so it is really crucial for them to have complete and accurate returns. In order to determine what can and can’t be claimed as a tax-deductible expense, Southbourne Tax Group suggests consulting your accountants as a landlord. With this, all claims are ensured legitimate and the tax return amount is maximized.

If you seek to make taxes easier as a landlord, it would be better to get the professional advice of a tax specialist. It is sometimes unavoidable to have tax-time stress but just continue reading and Southbourne Tax Group has a few more tips for you.

Negative gearing: In order to reduce the tax payable, the net loss which generates from negative gearing should be offset against other income. If a property is available for rent, landlords can claim the interest. However, you can’t claim the interest for the full 12 months of a property that is lived in for half a year and leased as a holiday rental for the other half.

Insurance: Making sure that you have the right coverage in checking your insurance policy is also important. Landlords won’t be covered for particular risks involved in property investing with a standard home and contents insurance policy.

Expenses: Southbourne Tax Group suggests not forgetting to claim the costs you are duly entitled to. As mentioned before, before submitting your claim, confirm first with your accountant on what can and cannot be claimed.

Offsetting costs: Are you one of the self-managing landlords? Working from home and its costs could be claimed as well, but not all since only a fair and reasonable part of it can be deductible.

Property manager: The cost of property managers can be a deductible expense said experts and they can be helpful to landlords as well. Landlords can save time by hiring a property manager because they can create a potential tax benefit while assisting with the organization at the same time.

Moreover, the administrative responsibilities included in an investment property can be taken good care of a trusted property manager, so with the help of such professional, the tax-time burden can surely be lessened.

You can contact Southbourne Tax Group today to know more steps on how to avoid doing taxes wrong with their proper tax guidance and service.

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Southbourne Tax Group Review - How to avoid doing taxes wrong as a property investor

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The Southbourne Tax Group - Forensische accountancy: Ondervindt u fraude?

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The Southbourne Tax Group - Forensische accountancy: Ondervindt u fraude?

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Forensische accountants weten dat de meest voorkomende vorm van fraude in elk bedrijf verduistering. Verduistering wordt meestal uitgevoerd op een systematische manier om te voorkomen dat elke vorm van detectie. Het kan gebeuren voor een lange periode van tijd en resultaat in enorme financiële verliezen voor een organisatie. Een forensisch accountant zal doen een achtergrond controleren van alle medewerkers om te bepalen van de persoon die verantwoordelijk is voor de fraude als ze ontdekken dat enig bewijs.

Opsporen van fraude in uw bedrijf

Als u geconstateerd fraude in uw organisatie, moet u bewijs alvorens actie tegen een werknemer die wordt verdacht. Met de hulp van een forensisch expert, zal u kunnen bepalen hoeveel een werknemer neemt, waarna de bewijzen die nodig zijn om de kosten van het bestand.

Bijstaan van uw wijzen van geschillenbeslechting

Uw forensisch accountant zal kunnen om u te helpen bij de behandeling van de resolutie van je geschil. Bijvoorbeeld, zal uw accountant kunnen de nodige bijstand te verlenen aan uw advocaat bij de voorbereiding van de operationele rapporten.

Forensische accountants zijn actief betrokken bij de presentatie van de rekening en het benaderen van boekhoudsystemen. Door het verkrijgen van een forensisch accountant aan boord, kan u gemoedsrust dat uw nummers en titels in bestelling voordat uw hofdatum zijn hebben.

In de rechtszaal

Een forensisch accountant heeft de verantwoordelijkheid voor het kwantificeren van de schade door beide partijen die betrokken zijn bij een juridisch geschil. Vaak moet je in een positie om geschillen te beslechten op Tsjaad Garland CPA voordat u naar het Hof; Als het geschil bij het bereiken van de rechtszaal gebeurt, kan echter een forensisch accountant als een getuige-deskundige getuigen.

Een forensisch accountant is meestal na een fraude zich al heeft voorgedaan, maar uw forensisch accountant zal zitten kundig voor schrijf deskundigenverslagen en helpen bij eventuele verdere fraudeonderzoeken ingehuurd. Ze zal forensische analyse van uw financiële gegevens, kennis van resultaten in mondelinge en schriftelijke verslagen voor uw geschillen en verschillen tussen medewerkers en de onderneming te identificeren.

Blootleggen verborgen activa en inkomsten

Forensische accountancy zal helpen bij het opsporen van een aantal zakelijke gebreken zoals het opsporen van verborgen, ontbreekt of frauduleuze financiële informatie. Om te bepalen als uw zakelijke rapporten kloppen of bent u verdacht van fraude, is het het beste om te praten met uw lokale cpa of forensisch accountant vóór het indienen van een belangrijke financiële documenten.

In het geval van een echtscheiding is een partner met een hoog inkomen waarschijnlijk om bepaalde activa te verbergen. Uw forensisch accountant zal helpen bij het opsporen van verborgen of overgedragen inkomsten door het analyseren van een ander individu de belastingaangiften en financiële overzichten. Merkteken technieken kunnen ook worden gebruikt ter identificatie van de verborgen activa. Uw forensisch accountant kan helpen om uw geval voor een billijk aandeel van wat je tijdens geschillen verdient.

Het vinden van een lokale forensisch Accountant

Bepalen of uw bedrijf tekenen van verduistering heeft of fraude moeilijk voor de gemiddelde ondernemer kunnen. Het is een enge gedachte voor de meeste Amerikaanse die hebben hun tijd en geld geïnvesteerd in onze business. Ons doel bij Tsjaad Garland CPA is te helpen ondernemers en particulieren ontdekken van enig bewijs van fraude, melden aan de lokale autoriteiten en helpen met succes het oplossen van eventuele financiële geschillen. Bel vandaag nog hebt u twijfels over uw recente financiële verslagen!

Wat is forensische Accounting?

Forensische accountancy is een tak van de boekhouding die poogt te identificeren en voorkomen van fraude in een organisatie. Forensische accountants, zoals Tsjaad Garland CPA, voeren audits in ondernemingen te identificeren van de verschillende manieren fraude is gepleegd. Ons werk is het verzamelen van concreet bewijs dat in een rechtbank ontvankelijk is. Wij combineren de onderzoeks- en boekhoudkundige vaardigheden in verschillende rechtszaken voor het verlichten van de gebeurtenissen die in gevallen van fraude en verduistering plaatsvonden.

What to Look for in uw forensisch Accountant

Bent u in de markt voor een goede forensisch accountant, moet u de volgende kenmerken in uw accountant van keuze identificeren vóór de ondertekening van alle papierwerk:

• CPA (certified public accountant) certificering

• Digitale forensische vaardigheden

• Expertise in andere gebieden van de financiële verslaggeving zoals controle, kleine zakelijke rekeningen, enz.

• Referenties van verleden klanten die succesvolle resultaten in geschillen hadden

Niet alle van dit is noodzakelijk om een goede forensisch accountant, maar u moet er zeker van te zijn dat u gebruik van een professional die vertrouwd is met deze vaardigheid ingesteld maakt op het krijgen van de beste bang voor je buck.

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The Southbourne Tax Group: Tips til at maksimere din tilbagebetaling af skat

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The Southbourne Tax Group: Tips til at maksimere din tilbagebetaling af skat

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2017 skat sæson begyndte denne måned og lokale skat revisor, Jennifer Eubanks med Mcneel CPA tilbyder nogle tips til folk, der endnu ikke har indgivet deres tilbagebetaling.

"En masse mennesker, der er selvstændige ikke ser at tage den selvstændige sygesikring," siger Eubanks, "Med sygesikring er så høje, kan du tage et fradrag."

En anden fradrag Eubanks siger folk ofte glip er deres sundhed opsparingskonto hvor du sætte penge ind på kontoen, men kun bruge det til at betale medicinske regninger.

"Du får også til at tage et fradrag på selvangivelsen for at sætte penge ind på en sundhed opsparing konto," siger Eubanks. "Det er lidt ligesom en pensionering konto bortset fra det er for lægeudgifter."

Betydning ligesom en 401k, jo mere du lægger i mindre skattepligtige indkomst du har, øge din tilbagebetaling.

Et andet tip er for forældre, der har børn i college, amerikansk mulighed for skattefradrag.

"Noget, der vedrører skole som bøger, undervisning," siger Eubanks. "Enhver form for kvalificerende udgifter for at de kan tage fradraget så de skal holde med alle de udgifter, de har mens de er i skole."

Eubanks siger IRS sprængning på svig året forsinker frigivelsen af arbejdsindkomst kreditter og ekstra barn skat indtil midten af februar.

"Hævder børn der ikke formodes for at være på deres selvangivelse så IRS undersøger i flere af disse arbejdsindkomst kredit forsøger at fjerne en masse af svig," siger Eubanks.

Når arkivering din afgifter Eubanks siger at holde alle dine indtægter og udgifter organiseret for at lette indgivelse proces.

Arbejdsgivere har indtil 31 Jan. sende W-2 former og selvangivelser skal indgives af 18 April.

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The Southbourne Tax Group - Tips til at maksimere din tilbagebetaling af skat

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The Southbourne Tax Group: Fem ting tidlige skat filers behøver at vide

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The Southbourne Tax Group: Fem ting tidlige skat filers behøver at vide

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Skat arkivering sæson begynder mandag, men nogle tidlige filers ansigt nye forhindringer, som slået hårdt ned på svindel fortsætter.

Åbningsdagen for IRS er mandag.

Det er da Internal Revenue Service vil begynde at acceptere indgives elektronisk selvangivelser. Vi har indtil April 18 at fil afkast, men mange fil tidligere i sæsonen, hvis de forventer store restitutioner.

Skat arkivering fristen i år er tirsdag, 18 April, i stedet for den traditionelle April 15, på grund af nogle særheder af kalenderen. 15 april er en lørdag. Men fristen flyttet ikke til mandag, April 17, fordi det er frigørelse dag, som fejres i Washington, D.C.

Hvad skal skat filers ved denne sæson?

1. Få en aftale, hvis du ønsker at tale med nogen på IRS kontorer.

Forvent ikke at falde ind i en IRS kontor til at få nogen hjælp denne skat sæson. Alle kontorer er kun aftale-nu.

2. Pas af en ny hurdle, hvis du har brugt en speciel individuelle Taxpayer Identification Number.

Nogle skat filers vil være ude af stand til at indgive deres føderale selvangivelser, hvis de ikke opdatere enkelte skatteyder identifikationsnumre. Advarsel: Enhver ITIN, der ikke har været brugt i de sidste tre år ikke længere vil arbejde for indgivelsen, der returnerer.

3. Nogle kæmper familier vil stå over for forsinkelser for deres refusion.

De IRS bemærker, at mere end ni ud af 10 restitutioner vil blive udstedt inden for mindre end 21 dage, hvilket er gode nyheder.

Men skat filers, der drager fordel af tjent indkomstskat kredit og yderligere Child Tax Credit skal ikke forvente deres tilbagebetaling indtil eventuelt uge af februar 27, selvom de fil så hurtigt som i denne uge.

4. Hold øje med høje omkostninger, hurtig-cash på skat eksportrestitution forskud.

Skat filers kunne blive fristet af restitutionen forventning lån, at proklamere "gebyr" vil blive opkrævet. Men Chi Chi Wu, personale advokat for National Consumer Law Center, advarer om, at i nogle tilfælde låntagere risikerer højere gebyrer for skat forberedelse eller et andet produkt.

5. Tag et nærmere blik på W-2 formen.

Nogle skat filers vil opdage, at de har til at beskæftige sig med en "Form W-2 bekræftelseskode."

Omkring 50 millioner W-2 formularer vil omfatte en 16-cifret bekræftelseskode, at skattemæssig filers eller klargørere skal tilføje når du bliver spurgt af skat software. Omkring 2 millioner W-2s havde en kode i sæsonen 2016 arkivering.

6. Husk, fidus kunstnere elsker skat sæson.

"Vi fortsætte med at spørge offentligheden til at være på vagt, fordi den snydere ikke stoppe," sagde Luis D. Garcia, IRS talsmand i Detroit.

De con kunstnere foregiver at være fra IRS kunne nå ud via din e-mail-indbakke, din postkasse eller selv banke på din hoveddør, sagde Garcia.

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The Southbourne Tax Group - Fem ting tidlige skat filers behøver at vide

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The Southbourne Tax Group: Redovisning av halvsanningar

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The Southbourne Tax Group: Redovisning av halvsanningar

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Oktober 2008: En rapport från en mäklarfirma på Satyam datorer ger en 'samla' rating, vilket innebär att den förväntar sig att beståndet att gå upp. Betyget baseras på företagets höga cash/marknaden cap baserat. Det IT-företaget hade rapporterat ett saldo av Rs 4.500 crore i slutet av räkenskapsåret 2007-08. Rapporten ger en ett år riktkurs på Rs 373 för beståndet. Lagret stänger Rs 273 dagen skrivs rapporten.

Januari 2009: Samma mäklarfirma släpper en hastigt-kompilerad rapport att avbryta den föregående rating. "Lågt Börsvärde, hög cash status som inte längre innehar," säger den. Den 7 januari 2009 medger grundare av Satyam datorer att blåsa kassa och banktillgodohavanden av Rs 5,040 crore, överdriva gäldenärers position (pengar lånade) av Rs 2,650 crore gentemot den faktiska siffran av Rs 490 crore och sekretessavtal eller underskattning av skulder värda Rs 1 230 crore.

Satyam redovisning bluff, en av de största i Indien, lämnade miljontals investerare i sticket, när aktien föll från Rs 179 till Rs 23 i en börsdagen.

Aktieanalytiker oförmåga att identifiera de "luckorna" i Satyam böcker och ring varning klockor visade sig vara kostsamma för investerare. Vetat investerare grunderna i läsning bokslut och tekniker som används av företag för att rapportera falska siffror, skulle de ha bett sin rådgivare några giltiga frågor om Satyam finanser.

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The Southbourne Tax Group: Sex Strategier för Bedrägeribekämpning i din Verksamhet

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The Southbourne Tax Group: Sex Strategier för Bedrägeribekämpning i din Verksamhet

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Anställd bedrägeri är ett betydande problem för organisationer av alla typer, storlekar, platser och industrier. Medan vi skulle alla vilja för att tro våra anställda är lojala och arbetar till förmån för organisationen (och de flesta av dem förmodligen är), finns det fortfarande många skäl varför dina anställda kan begå bedrägeri och där de kan göra det på flera olika sätt. Enligt rapporten 2014 till nationen på yrkesmässiga bedrägerier och missbruk (upphovsrätt 2014 av föreningen av certifierade bedrägeri examinatorer, Inc.), forskning visar att den typiska organisationen förlorar 5% av dess årliga intäkter varje år på grund av anställd bedrägeri. Förebygga och upptäcka är avgörande för att minska denna förlust. Varje organisation bör ha en plan för att förebygga bedrägerier är mycket lättare än att återställa dina förluster efter ett bedrägeri har begåtts.

Typer av bedrägeri

Bedrägeri kommer i många former men kan delas upp i tre kategorier: asset förskingring, korruption och bokslut bedrägeri. Tillgången förskingring, även om minst kostsamma, gjort upp 90% av alla fall av bedrägerier som studerade. Detta är system där en anställd stjäl eller utnyttjar sin organisations resurser. Exempel på tillgångar förskingring stjäla kontanter före eller efter det är registrerats, att göra en fiktiv kostnad ersättning fordran och/eller stjäla icke-kontanta tillgångar av organisationen.

Bokslutet bedrägeri omfattade mindre än fem procent av fallen men orsakade mest median förlusten. Detta är system som involverar utelämnande eller avsiktligt förvrängd information i företagets finansiella rapporter. Detta kan vara i form av fiktiva intäkter, dolda skulder eller uppblåsta tillgångar.

Korruption föll i mitten och gjorde upp mindre än en tredjedel av fallen. Korruptionen system hända när anställda använder sitt inflytande i affärstransaktioner för egen vinning samtidigt bryter mot sin plikt till arbetsgivaren. Exempel på korruption är mutor, utpressning och intressekonflikter.

Förebygga bedrägerier

Det är viktigt att en organisation, stor eller liten, har ett bedrägeri förebyggande plan på plats. De fall av bedrägerier som studerat i rapporten ACFE 2014 avslöjade att de bedrägliga aktiviteter studerade varade i genomsnitt 18 månader innan upptäcks. Föreställ dig typ av förlust som företaget skulle kunna lida med en anställd som begår bedrägeri för ett och ett halvt år. Lyckligtvis, det finns sätt du kan minimera bedrägeri förekomster genom att genomföra olika förfaranden och kontroller.

1. Lär känna dina anställda

Bedrägeri förövarna Visa ofta beteendemässiga egenskaper som kan indikera för avsikt att begå bedrägeri. Att iaktta och lyssna till anställda kan hjälpa dig identifiera potentiella risken för bedrägerier. Det är viktigt för ledningen att medverka med sina anställda och ta tid att lära känna dem. Ofta kan en attityd förändring ledtråd du för en risk. Detta kan också avslöja interna problem som behöver åtgärdas. Till exempel om en anställd känns en brist på uppskattning från företagsägaren eller ilska på sin chef, kunde detta leda honom eller henne att begå bedrägeri som ett sätt att hämnas. En attityd förändring bör få dig att ägna stor uppmärksamhet åt den anställde. Detta kan inte bara minimera förlust från bedrägeri, men kan göra organisationen en bättre, mer effektiva plats med gladare medarbetare. Lyssna på anställda kan också avslöja andra ledtrådar. Överväga en anställd som har arbetat för företaget i 15 år som arbetar nu 65 timmar i veckan istället för 40 eftersom två medarbetare friställdes. En diskussion med anställde visar att förutom hans nya, tyngre arbetsbelastning, brodern förlorat sitt jobb och hans familj har flyttat in i den anställdes hus. Detta kan vara en signal om en potentiell risk för bedrägeri. Mycket ofta och tyvärr är det den anställde som du minst anar som begår brottet. Det är viktigt att veta dina anställda och engagera dem i samtal.

2. gör anställda medvetna eller inrättas rapporteringssystem

Medvetenhet påverkar alla anställda. Alla inom organisationen bör vara medveten om bedrägeri riskpolicy inklusive typer av bedrägerier och de konsekvenser som är förknippade med dem. De som planerar att begå bedrägeri vet att ledningen är att titta på och kommer förhoppningsvis att avskräckas av detta. Ärlig anställda som inte är frestad att begå bedrägeri kommer också göras medvetna om möjliga tecken på bedrägeri eller stöld. Dessa anställda är tillgångar i kampen mot bedrägerier. Enligt rapporten ACFE 2014 upptäcks de flesta tjänstepensioner bedrägeri (över 40%) på grund av ett tips. Medan de flesta tips kommer från anställda i organisation, är andra viktiga källor till tips kunder, leverantörer, konkurrenter och bekanta av bedragaren. Eftersom många anställda är tveksam till att rapportera incidenter till sina arbetsgivare, överväga att inrätta en anonym rapporteringssystem. Anställda kan rapportera bedräglig aktivitet via en webbplats som skyddar deras identitet eller med en tip-hotline.

3. genomföra interna kontroller

Interna kontroller är de planer eller program som genomförs för att skydda företagets tillgångar, säkerställa integriteten av sina räkenskaper, och motverka och upptäcka bedrägerier och stöld. Ansvarsfördelning är en viktig del av intern kontroll som kan minska risken för bedrägerier uppstår. En butik har exempelvis en kassaapparat medarbetare, en säljare och en manager. Kassa och kontrollera registrera inleveranser bör vara stämde av en anställd medan en annan förbereder insättningsblanketten och tredje ger insättning till banken. Detta kan hjälpa avslöja eventuella avvikelser i samlingarna.

Dokumentation är en annan intern kontroll som kan bidra till att minska bedrägerier. Överväga exemplet ovan; om försäljning inleveranser och förberedelse av bankinsättning dokumenteras i böcker, kan företagsägaren titta på dokumentationen dagligen eller veckovis för att verifiera att inleveranser var insatta på banken. Dessutom gör alla kontroller, inköpsorder och fakturor Smådelarna är numrerade. Använda "endast för insättning" frimärken på alla inkommande kontroller, kräver två underskrifter på kontroller över ett angivet belopp och Undvik att använda en underskrift stämpel. Också vara uppmärksamma på nya leverantörer som fakturering-scheme förskingrare setup och gör betalningar till fiktiva leverantörer, vanligtvis skickas till en postbox.

Intern kontrollprogram övervakas och revideras på ett konsekvent sätt att säkerställa att de är effektiva och nuvarande med tekniska och andra förskott. Om du inte har en intern kontroll process eller bedrägeri förebyggande program på plats, bör då du anlita en professionell med erfarenhet på detta område. Expert kommer att analysera företagets strategier och förfaranden, rekommendera lämpliga program och hjälpa till med genomförandet.

4. monitor semester saldon

Du kan bli imponerad av de anställda som inte har missat en dag på jobbet i år. Även dessa kan låta som lojala anställda, kan det vara ett tecken på att dessa anställda har något att dölja och är orolig att någon kommer upptäcka deras bedrägeri om de var på kontoret under en tid. Det är också en bra idé att rotera anställda till olika jobb inom ett företag. Detta kan också avslöja bedräglig aktivitet eftersom det tillåter andra anställd att granska först verksamhet.

5. anställa experter

Certifierade bedrägeri examinatorer (CFE), kan auktoriserade revisorer (CPA) och CPAs som är certifierade i finansiella kriminalteknik (CFF) hjälpa dig att etablera förebyggande politik och förfaranden. Dessa yrkesgrupper kan ge ett brett utbud av tjänster från komplett internkontroll revisioner och kriminalteknisk analys till allmänna och grundläggande samråd.

6. lev företagskulturen

En positiv arbetsmiljö kan förhindra anställd bedrägeri och stöld. Det bör finnas en tydlig organisationsstruktur, skriftliga riktlinjer och rutiner och rättvis anställningspraxis. En öppen-dörr politik kan också ge ett stort bedrägeri förebyggande system eftersom det ger anställda öppna kommunikationslinjer med management. Företagare och ledande befattningshavare bör föregå med gott exempel och hålla varje medarbetare ansvarig för sina handlingar, oavsett position.

Bedrägerikontroll

Utöver förebyggande strategier, bör du också ha detektionsmetoder på plats och göra dem synliga för anställda. Enligt VD Business Risk för bedrägeri: en praktisk Guide, utgiven av Association av certifierade bedrägeri examinatorer (ACFE), synbarheten av dessa kontroller fungerar som en av de bästa avskräckande att bedrägligt beteende. Det är viktigt att kontinuerligt övervaka och uppdatera dina bedrägeri upptäckt strategier för att säkerställa att de är effektiva. Påvisa uppträder vanligtvis under de schemalagda arbetsdagen. Dessa planer ta extern information i beaktande att länka med interna data. Resultaten av dina planer för upptäckt av bedrägeri bör förbättra din förebyggande kontroller. Det är viktigt att dokumentera dina bedrägeri upptäckt strategier inklusive individer eller team som ansvarar för varje uppgift. När den slutliga bedrägeri Upptäck planen har slutförts, kan alla anställda bör göras medvetna om planen och hur det kommer att genomföras. Kommunicera detta till anställda är en förebyggande metod i sig själv. Vetskap om företaget är att titta på och kommer att vidta disciplinära åtgärder kan hindra anställdas planer att begå bedrägeri.

Slutsats

Dem som är villiga att begå bedrägeri diskriminerar inte. Det kan hända i stora eller små företag inom olika branscher och geografiska platser. Yrkesmässiga bedrägerier kan resultera i stora ekonomiska förluster, rättsliga kostnader och förstörda rykte som kan i slutändan leda till undergången av en organisation. Att ha ordentlig planerna på plats kan avsevärt minska bedrägliga aktiviteter inträffar eller skära förluster om ett bedrägeri redan inträffat. Att göra principen företaget känt till anställda är ett av de bästa sätten att avskräcka bedrägligt beteende. Efter med politiken och genomdriva noterade stegen och konsekvenserna när någon fångas är avgörande för att förebygga bedrägeri. Kostnaden för försöker

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The Southbourne Tax Group: 5 surprising things you can deduct from your income taxes

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The Southbourne Tax Group: 5 surprising things you can deduct from your income taxes

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“Can I deduct this?” When Americans sit down to fill out their income-tax forms on or before the April 15 deadline, that’s the question they’ll likely ask the most.

They may be shocked by how often the answer is “yes,” and the sheer variety of expenses they can deduct. Most people know that business-related items are usually tax deductible — no matter how odd. That could include body oil for a masseuse or professional body builder, says Dave Du Val, vice president of customer advocacy at TaxAudit.com, which is based in Sacramento, Calif. Ditto, free beer used for a sales promotion. But a recent survey showed that only 51% of more than 1,000 people surveyed understood relatively basic questions about their income taxes, and the estimated average $2,840 tax refund for 2017 likely does not include the refunds that people did not know they could claim.

Of course, most people know many charitable donations are deductible, but some people are especially watchful for deductions others might miss. Grafton “Cap” Willey, managing director at CBIZ Tofias, an accounting and professional services provider in Providence, R.I., helped a client who’d bought a house and land — and wanted to build a better house — write off the fair market value of the windows, lumber and other usable items from the property that he donated to a homeless charity. And documentation is critical. “Take a photo with your iPhone of that bag of clothes you donate, and get a receipt. That all counts as evidence.”

To help people think more broadly about the kinds of things they can deduct, here are five unusual tax deductions:

Swimming pools

Context is everything when it comes to deductions, especially when expenses are being characterized as being for medical purposes. Johanna Turner, senior partner at Milestones Financial Planning in Mayfield, Ky., had clients whosuccessfully deducted the full cost of a $40,000 swimming pool. “Their child had been injured in an accident,” she says. “They received doctor’s orders for swimming therapy.” The key here is making sure a doctor signs off on the deductions, Turner says. There are also deductions taken for hot tubs and pools as long as they, too, are doctor-prescribed, adds Megan Thompson, a certified public accountant at Thompson Accounting in San Jose, Calif. Upgrading your property for lifestyle or reselling, for instance, would not count.

Abortion

This may be the most politically and ideologically divisive of all deductions. The IRS says: “You can include in medical expenses the amount you pay for a legal abortion.” So an abortion — which can cost from $500 to $1,000 — could be deductible if it was included with other medical expenses. Taxpayers can also include in medical expenses the amount they pay to purchase a pregnancy test kit to determine if they are pregnant, and the cost of a sterilization or vasectomy. When it comes to all medical expenses, you cannot include those that were paid by insurance companies or other sources, and the total medical expenses in question need to exceed 10% of your adjusted gross income (this falls to 7.5% for those who are 65 or over for all medical expenses).

Gambling losses

“If you have gambling gains, you can deduct a large number of expenses to go to Vegas up to the point where it offsets much or all of the gains,” says Scott Bishop, director of financial planning at STA Wealth Management in Houston. You can deduct your losses, but no more than your winnings in that tax year. Gambling income includes winnings from lotteries, raffles, horse races and casinos, and fair market value of prizes such as cars and trips. “To deduct your losses, you must be able to provide receipts, tickets, statements or other records,” the IRS states. For casinos, you need copies of check-cashing records. Some states don’t allow deductions on gambling losses, however.

Service dogs and dog food

Man’s best friends can be another tax-deductible expense. “I had a client with a warehouse deduct the cost of buying guard dogs,” Bishop says. Their pet food may also be deducted. He is aware of one case where a person deducted the cost of transporting their six dogs as a work-related moving expense. Taxpayers may also include as medical expenses the costs of buying, training and maintaining a guide dog or other service animal to assist a person with physical disabilities. This includes any costs, such as food, grooming and veterinary care incurred in maintaining the health of the service animal.

Gender confirmation surgery

In 2010, the federal tax court ruled in favor of a transgender woman, Rhiannon O’Donnabhain, who had taken up a case against the IRS for refusing to allow a $5,000 deduction for $25,000 in medical expenses for gender confirmation surgery, those costs “not compensated for by insurance or otherwise, for medical care of the taxpayer.” In its ruling, the tax court said gender-identity disorder is widely recognized in diagnostic and psychiatric reference texts, and all three experts testifying in the case consider the disorder a serious medical condition, and the mental-health professionals who examined O’Donnabhain found that her disorder was a severe impairment.

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group - 5 surprising things you can deduct from your income taxes

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The Southbourne Tax Group: Beware tax preparer fraud, other ‘dirty dozen’ scams

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The Southbourne Tax Group: Beware tax preparer fraud, other ‘dirty dozen’ scams

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If you’re rushing to get your tax return in the mail, take care when choosing your tax preparer. If you don’t, you could lose your refund and face fines or jail time if your preparer files a fraudulent return.

Tax preparer fraud was the focus of a March 1 alert from the National Consumers League (NCL).

“Getting caught up in a tax preparer scam will not just cheat you out of your refund and scam you into paying bogus fees, it can also expose consumer victims to other liabilities,” John Breyault, an NCL vice president, said in a statement. Those liabilities include hefty fines and even imprisonment associated with the criminal offense of filing a fraudulent tax return.

In February 2017 alone, tax preparers in New York, Nebraska and Louisiana were charged with tax fraud. And in 2015, the U.S. Department of Justice closed more than 35 tax return preparers’ operations because of fraud.

Tax preparer fraud also makes the Internal Revenue Service’s list of the “dirty dozen” tax scams for 2017.

How the scam works: Often, the tax preparer will falsify your earnings, claim credits for you that you didn’t earn or steal your refund by having it deposited into someone else’s account, according to the NCL.

To protect yourself, the NCL and IRS offer tips when choosing a tax preparer, including:

·        Check for his or her Preparer Tax Identification Number (PTIN). The IRS offers a tax preparer directory so you can check his or her credentials.

·        Refuse to sign a blank tax return.

·        Steer clear if your preparer doesn’t require you to submit your W-2s.

·        Avoid preparers who charge fees based on a percentage of your refund, or who claim they can get bigger refunds than other preparers.

·        Avoid giving your Social Security number or tax documents when you’re just inquiring about a tax preparer’s service. Otherwise they might file a fake tax return in your name.

·        Be sure to review your return before it’s filed, and make sure you get a copy of your return.

You also may cut your risk of fraud by getting free tax preparation help sanctioned by the IRS. If you make less than $54,000 a year, you likely qualify for free, in-person guidance through Volunteer Income Tax Assistance programs.

If you make less than $62,000 per year, you can get free online help through the IRS Free File program.

Tax preparer fraud isn’t the only thing to be on your guard against this year. Also making the “dirty dozen” are phone scams,  in which fraudsters call up and impersonate IRS agents. These fraudsters claim you owe taxes and try to get you to cough up cash.

Between October 2013 and January 2016, the Treasury Inspector General for Tax Administration received nearly 900,000 reports of such calls, and more than 5,000 victims paid more than $26 million to the scammers.

The fake agents often threaten to sue, arrest or deport you if you don’t pay using prepaid debit cards or wire transfers.

Other frauds on the “dirty dozen” list are phishing emails, which look as if they come from the IRS or a tax software company. If you click a link, you land on an official-looking website and are asked for personal information, which the criminals use to create false tax returns.

Identity theft also continues to be a major concern, with bad guys using stolen Social Security numbers to file fraudulent returns. While the number of identity theft tax cases has plunged, almost 238,000 cases were reported in 2016.

“It’s the second year tax return fraud has decreased,” Breyault says, “but they’re not going to be able to catch all of it.”

Additional resources for business accounting tips are available here

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The Southbourne Tax Group Review: The state of play on tax evasion and avoidance

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The Southbourne Tax Group Review: The state of play on tax evasion and avoidance

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Sometimes it can be hard to keep up with the avalanche of government announcements on tax avoidance and evasion. This guide, produced by Jason Collins, a member of the CIOT’s Management of Taxes Sub-Committee, should bring tax agents, journalists and others with an interest in tax compliance up to speed with the rapidly changing landscape in this area

Offshore evasion

The 1st of January 2017 was a seminal date in the war against offshore tax evasion because it is the date on which financial accounts in existence in jurisdictions in the 'late' adopters of the Common Reporting Standard (CRS), will have to be reported, even if they are closed after this date.

Although the trigger dates were earlier for the Crown Dependencies and Overseas Territories (CDOTs) (1 July 2014) and early adopters of the CRS (1 January 2016), the late adopter countries are perhaps the most significant because they include the major financial centres of Switzerland, Hong Kong, Dubai and Singapore.

HMRC received the data from the CDOTs in September 2016 and has begun the process of matching that data to information it already holds in order to decide who to investigate. The data pot will be enhanced by the receipt of the CRS early adopter data in September this year and late adopter data in September 2018.

Enablers

The date of 1 January 2017 also brought the start of Finance Act 2016 penalties for enablers of someone else's offshore tax evasion or careless non-compliance. Penalties can be up to 100 per cent of that other person's tax liability.

It is worth noting here that the taxpayer will be entitled to mitigation of his or her own penalty if he or she provides information about any enabler.

Strict liability offence

HMRC is under pressure to prosecute more people for offshore tax evasion, and FA 2016 introduced a new 'strict liability' offence which may achieve this end. The offence will apply if a UK taxpayer fails to notify HMRC of his or her chargeability to tax, fails to file a return or files an incorrect return in relation to income, gains or assets in a non-CRS country and the underpaid tax is more than £25,000 per tax year. There will be no need for the prosecution to prove that the individual's actions were dishonest but the taxpayer can put forward a 'reasonable excuse' defence. The maximum sanction is six months of imprisonment. We do not yet have a definite date, but it is expected this will apply from April 2017.

Corporates

As with the above, HMRC is also under pressure from the public to see more companies and partnerships prosecuted – in particular those who fail to prevent their staff and agents from criminally facilitating third party tax evasion. A new offence is being introduced in the Criminal Finances Bill and will be effective by September 2017 at the latest.  Liability is again 'strict', but it will be possible to advance a defence that reasonable procedures were in place to try to stop the misconduct (or that it was not reasonable in all the circumstances to expect there to be a procedure in place).  The offence is being introduced because under the current law a corporate will only be criminally liable if very senior management (usually board level) were involved or knew about the facilitation, meaning that it can be all too easy for senior management to let unscrupulous practices go on, provided they know nothing about them.

Tougher civil penalties

Despite bringing more prosecutions, most cases will continue to be dealt with by HMRC levying financial penalties rather than seeking a criminal conviction. The current maximum penalties for offshore evasion depend upon the extent that the UK has exchange of information arrangements with the jurisdiction connected to the non-compliance, with a maximum penalty of 200 per cent of the tax for the most opaque regimes. The standard penalty payable can be increased by up to 50 per cent where there has been a deliberate attempt to move assets in order to avoid exchange of information regimes (Sch 21, FA 2015).

In addition, a new 'asset-based' penalty is being introduced (Sch 22 FA 2016) for the most serious cases of evasion with an offshore connection. It is levied in addition to the standard penalties for deliberate behaviour. The asset-based penalty starts at the lower of 10 per cent of the value of the asset and 10 times the potential lost revenue related to the asset and is subject to mitigation. It is not yet known when this penalty will come into force, but it is likely to be sometime in 2017.

Disclosure facilities and 'Requirement to Correct'

The Liechtenstein Disclosure Facility (LDF), which despite its name could be used for irregularities in other jurisdictions, has been withdrawn and replaced with the much less generous Worldwide Disclosure Facility (WDF). The WDF offers no tax amnesty, penalty reduction or guarantee of non-prosecution and therefore provides little incentive for the hard core who have resisted the numerous previous settlement initiatives to regularise their position. The WDF requires the taxpayer to pay the tax, interest and a self-assessed reckoning of the penalties which apply.

Linked to this, Finance Bill 2017 will include new measures applying to a person with any undeclared tax relating to offshore matters as at 5 April 2017. The law will impose a special 'new' statutory requirement to correct the issue between 6 April 2017 and 30 September 2018. The issue is treated as corrected if the taxpayer takes certain steps, including formally bringing it to the attention of HMRC under the WDF, before the deadline.

A failure to correct by the deadline will lead to two things. First, the time limit applying to HMRC's powers to assess will be extended so that HMRC is given a further four years beyond the usual timeframes in which to discover and collect the under-declared tax.

Second, the old penalty regime will fall away and a new super penalty will be applied.  The penalty is between 100 per cent and 200 per cent of the potential lost revenue (depending on the levels of cooperation).  The underlying conduct giving rise to the non-compliance is irrelevant.  However, there is a 'reasonable excuse' defence and provision for reduction of the penalty in special circumstances.

This super penalty can be imposed in addition to the asset–based penalty mentioned above. It is also subject to an increase of up to 50 per cent under Sch 21 FA 1015 if HMRC can show that assets or funds have been moved in a deliberate attempt to avoid exchange of information (see above).

Obligation to write to clients

Advisers who have provided tax advice to UK residents in relation to offshore accounts, assets and sources of income and financial institutions who have provided offshore accounts are required to send a letter to their clients enclosing a HMRC leaflet and reminding them of their obligation to disclose offshore income and gains. It will apply in respect of advice provided in the year to 30 September 2016 and there are exclusions. A useful exclusion for advisers covers the situation where all the adviser has done is prepare tax returns disclosing offshore income.  Letters need to be sent by 31 August 2017 but advisers need to start working out which clients they need to contact, if they have not already done so.

Requirement to notify offshore structures

HMRC is consulting until 27 February 2017 on a proposed new legal requirement for intermediaries (both within and outside the UK) creating or promoting certain complex offshore financial arrangements to notify HMRC of the details and provide a list of clients using them. The measure aims to target arrangements which could easily be used for tax evasion purposes. It is proposed that the requirement should apply to arrangements in existence at 31 December 2016, rather than just new arrangements entered into after the new measure comes into force, in order to tie in with the start of CRS.

Onshore evasion

More tax is lost to onshore evasion or non-compliance than to offshore evasion and avoidance but it does not always attract the same level of public interest - for example a former minister for tax was vilified for making the very valid point about the scale of the tax loss from paying tradespeople in cash. Indeed, the largest single type of loss to the exchequer is from the 'hidden' economy - for instance those who fail to register for tax at all (known as 'ghosts') or fail to declare an entire source of income (known as 'moonlighters'). In 2014/15 (the latest figures available), 17 per cent of the tax gap (some £6.2bn) was estimated to be down to this type of non-compliance.

As with offshore evasion, HMRC has adopted a two pronged strategy to counteract domestic tax evasion. This involves a combination of 'encouraging' recalcitrant individuals to come forward and increasing HMRC's powers to obtain information from third parties who may provide the key to finding those who are non-compliant.

Disclosure initiatives

Recent 'encouragement' initiatives involve HMRC targeting areas where they believe there may be non-compliance. In the past HMRC has focused on specific industries, eg plumbers, solicitors and doctors, but over the last year it has launched campaigns targeting specific types of income that may be relevant to the population more generally, such as buy-to-let rental income and income from second occupations. These initiatives enable a voluntary disclosure to be made of previously undeclared income and generally offer reduced penalties, compared to the position if it is HMRC that discovers the non-declared income.

'Nudge' letters

A more controversial aspect of the strategy to encourage non-compliant people to come forward voluntarily has been the use of 'nudge' letters. These letters to taxpayers reminding them of their obligations are sometimes not copied to agents, such as one that was sent out just before Christmas to those who had declared interest income on their 2014-5 tax return asking them to check the figures returned. It was not clear from the contents of this standard letter whether it had been sent randomly or to specific individuals as a result of HMRC receiving different information from banks and building societies about the interest paid. Anecdotal evidence from tax advisers suggests that the letter worried some individuals who had, in fact, complied with their obligations.

Increased HMRC powers

In relation to the second prong of the strategy, there were three consultations last year on additional powers to clamp down on the hidden economy. One consultation proposed extending HMRC's data gathering powers to enable it to collect data from money services businesses (for instance businesses that provide money transmission, cheque cashing or currency exchange services). As part of the 'Fintech' revolution, more and more people are buying bank services outside the traditional bank supply lines and HMRC has had to respond to try to ensure that the 'shadow banking' sector cannot easily be used to hide sources of income or wealth.

Another consultation proposed making access to public sector licenses such as licences for private hire vehicles, environmental health, planning and property letting conditional on registering for tax. As an alternative the government is considering measures which will effectively give financial services companies an indirect role in policing the hidden economy, by making access to business services such as insurance and bank accounts conditional on proving that you are registered for tax.

The third consultation document proposed tougher sanctions for those involved in the hidden economy, including higher penalties for those who repeatedly fail to notify chargeability, additional tracking and enhanced monitoring of taxpayers with a history of non-compliance, and strengthening the penalty regime where an immigration offence is also committed.

Connect

In this high-technology age, HMRC has invested heavily to keep up.  It has spent a very large sum of money on a database, called 'Connect'.  All information is fed into this data trove and reviewed in order to inform HMRC's deployment of resource to meet onshore and offshore risks, as well as identifying specific instances of non-compliance.  The flip side is that as the country moves away from using cash, the traditional channels for the hidden economy are closing.  Tax evasion is as old as the hills, but one wonders whether it has met its match.

Tax avoidance

A crackdown on tax evasion is probably only just ahead of a crackdown on avoidance in the political popularity stakes. In the eyes of HMRC, aggressive avoidance is no more acceptable than evasion and shares the feature that (because of their overwhelming success rate in challenging avoidance) tax is legally due but unpaid. This perspective has justified a barrage of measures in recent years.

Penalties for enablers of avoidance

The most contentious measure is the suggested imposition of penalties on the 'supply chain' in avoidance – not just the designers and promoters, but those who provide advice and who sell the arrangements to others.

A first consultation drew gasps from among the tax industry as it suggested penalties would be applied to any bank or adviser whose client was successfully challenged under, among other things, a targeted anti-avoidance rule. The penalty would be up to 100 per cent of the tax due from the client.

Thankfully HMRC listened to stakeholders' concerns about the breadth of the proposals and the draft legislation for inclusion in Finance Bill 2017 provides that the measure will only apply to 'abusive arrangements'. This uses the 'double reasonableness' test used for the general anti-abuse rule (GAAR) – arrangements which cannot reasonably be regarded as a reasonable course of action having regard to all the circumstances. The penalty will be capped at the fee received by the adviser/intermediary.  It is proposed that the new rules will apply to activity taking place after Royal Assent is given to the 2017 Finance Bill.

Serial tax avoiders

A new 'serial tax avoiders' regime has been in force since 15 September 2016. It applies where a tax avoidance scheme is 'defeated' (either by the decision of a tribunal or court or by settlement with HMRC). Anyone who has participated in a scheme on or after 15 September 2016 can be issued with a warning notice which lasts for five years and imposes an annual obligation to notify HMRC of further schemes used, with enhanced penalties, possible 'naming and shaming' and restriction of access to tax reliefs if any schemes used within the period are defeated. A warning notice can be issued to those who entered into schemes before 15 September 2016 which are defeated on or after 6 April 2017, but then only the annual notification requirements apply and not the other sanctions.

Increased transparency

Tied in with international measures and the fight against tax evasion and avoidance we have also seen a number of measures to increase transparency. These include the requirement since April 2016 for certain UK companies and LLPs to formally identify and keep a register of 'persons with significant control' over them and to provide this information to Companies House at least annually. There are also proposals for a register of people controlling non-UK companies owning UK real estate as well as a register of settlors and beneficiaries of trusts which generate UK tax consequences. Further details are expected this year.

Large businesses will also be required to publish their tax strategy online. This will include details of their attitude to tax planning and their appetite for risk.  Country-by-Country Reporting, under which large companies have to formally break down where they make profits and where they pay tax, will also go live in 2017.

VAT

Clause 95 of the Finance Bill 2017 provides for a new penalty which will apply to anyone found to have claimed input tax on a transaction which they 'knew or should have known' was connected with a VAT fraud (the input tax claim thus being bad in law).  HMRC say that the current VAT penalty regime (which identifies careless or deliberate errors) requires HMRC to specify whether they are alleging one or the other of actual and constructive knowledge for the purposes of the penalty, whereas they do not need to make this distinction for the legal test in respect of the tax itself.  Under this new fixed 30 per cent penalty, liability is engaged irrespective of the type of knowledge. The penalty cannot be reduced for co-operation with HMRC and company officers can be personally liable.

Tax Avoidance Disclosure Regimes for Indirect Taxes and Inheritance Tax

The Government will revise the VAT avoidance disclosure regime (VADR) and widen it to cover other indirect taxes from September 2017. Among the proposals is to move the principal obligation to report schemes from VAT-registered businesses to scheme promoters and align the penalties for non-compliance with VADR obligations with those chargeable under DOTAS. The Government insists that it will reduce burdens as the focus for compliance shifts from all taxpayers to a much smaller number of promoters. HMRC plans to introduce a wider disclosure mechanism applicable to all IHT arrangements that are contrived or abnormal, or which contain contrived or abnormal steps. More details are to be included in the regulations.

Conclusion

Although the pace of change has already been very rapid, a significant number of the measures outlined above are due to take effect in 2017. This will give HMRC considerably more fire power in its battle against tax evasion and avoidance.  Tax advisers need to be aware of the impact these changes could have on their clients and of the increasing number of measures which could catch the unwitting tax adviser.

Additional resources for business accounting tips are available here

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The Southbourne Tax Group: How To Recognize the Signs of Tax Identity Theft

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The Southbourne Tax Group: How To Recognize the Signs of Tax Identity Theft

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Tax filing season is upon us. Soon you will be filing your paperwork and perhaps receiving a nice check — unless thieves file a return in your name first and falsely claim your refund.

Unfortunately, if a thief has your Social Security number and other relevant information, tax identity theft is very hard to prevent. Greg McBride, Chief Financial Analyst for Bankrate.com, notes that "somebody could have your Social Security number and they could have been sitting on it for a while... you would have no idea until they go and file a bogus tax return under your Social Security number. You only find out at the point where your legitimate return gets rejected."

While recent IRS efforts have resulted in a 50% drop in both confirmed fraudulent identity theft tax returns and new identity theft reports from 2015 to 2016, tax-identity thieves still falsely claim millions of dollars in undeserved refunds every year.

The IRS is attempting to help taxpayers be proactive by recognizing the signs of potential tax ID theft. The "Taxes. Security. Together" program urges taxpayers to take reasonable precautions and to work with the IRS whenever any activity occurs that suggests tax ID fraud.

Examples of suspicious activity include receiving tax–related documents that you did not request and should not receive, including receiving a bogus refund. Occasionally, information meant to be delivered to the thief will be sent to you by mistake. If you receive a tax document from an employer that you have never worked for, a tax transcript that you did not request, or a reloadable prepaid debit card that you did not expect, you should be highly suspicious of potential tax fraud.

You may also receive a letter from the IRS asking you to verify a suspicious tax return filed with your name and Social Security number. A greedy thief may try to claim a large refund or make a basic error in the return that compels the IRS to label the return as suspicious. When that occurs, the IRS will contact you to see if the return is legitimately yours.

If your return is rejected, start by immediately looking for any simple errors such as transposed Social Security numbers or confusion with respect to dependents — for example, your teenage son or daughter filed their own return claiming themselves when you have also claimed them as a dependent. If no errors are evident, you will have to deal with what McBride calls the "massive headache" of rectifying the situation.

McBride offers perhaps your best line of defense: "To whatever extent you can, try to file your tax return early." Beat the thieves at their own game and file as soon as you have the necessary tax documents from employers and financial accounts. However, since the thieves don't care if your information is correct or not, they have an inherent time advantage.

It's preferable to be preventative and extremely careful with your personal information. The IRS urges you to take reasonable and simple steps, such as securing your computer and mobile devices, using strong passwords, avoiding phishing e-mails, and not engaging in suspicious texts and calls from alleged IRS officials.

Make sure that you take similar precautions with your mobile and wireless connections. Never transmit personal information over unsecured Wi-Fi connections or to unverified websites.

With respect to tax fraud, the IRS is your ally. Neither one of you wants tax-identity thieves to succeed. Do your part, be proactive and vigilant, and help to make 2017 a difficult year for tax-identity thieves.

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group - How To Recognize the Signs of Tax Identity Theft

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The Southbourne Tax Group Review: Struggling middle class give less to charity

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The Southbourne Tax Group Review: Struggling middle class give less to charity

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Donations by wealthy Americans surge

The divide between the rich and not-so-rich in America can be seen most glaringly in the amount of money they give (and have stopped giving) to charitable causes.

The average American household is giving far less to charity than it did a decade ago, but this hides two vastly different patterns of charitable giving. Over the past 10 years, charitable giving deductions from lower-income donors have declined significantly, at almost the same rate that charitable giving from higher income donors increased. Itemized charitable deductions from donors making less than $100,000 a year declined by 34% from 2005 to 2015, while the same deductions from donors making $100,000 or more a year increased by 40%, according to a study of tax filings by the Institute for Policy Studies, a left-wing think tank.

“The growth of inequality is mirrored in philanthropy,” Chuck Collins, report co-author said. “As wealth concentrates in fewer hands, so does philanthropic giving and power.” As a result, charities are increasingly relying on larger donations from smaller numbers of high-income, high-wealth donors, which could lead to undue influence of funds in major charitable organizations. And they are receiving less from the vast population of donors at lower and middle-income levels. (The authors consider low and mid-range donor income as under $100,000 per year.) Overall, charitable giving increased 4% to $373.25 billion year-over-year in 2015, regardless of income level.

The number of donors giving at typical donation levels has also been steadily declining. (In terms of donations, below $10,000 is considered a low to mid-range gift, while over $10,000 is considered a high-dollar gift.) Lower and middle income donors to national public charities have declined by as much as 25% between 2005 and 2015. These are the people who have traditionally made up the vast majority of donor files and lists for most national nonprofits since their inception. This rate of decline “correlates strongly” with overall economic indicators, such as wages, employment and homeownership rates, the study said. And more and more giving is going into warehousing vehicles like foundations and donor advised funds, instead of to charities on the ground, it added.

It’s not all doom and gloom: Giving to schools and colleges is expected to grow by 6.3% this year and 6.1% next year, according to a separate report released last year by the Indiana University Lilly Family School of Philanthropy and presented by Marts & Lundy, a fundraising and philanthropy consulting firm based in Lyndhurst, N.J. But the middle class likely had less to do with this spike too. “This may be due in part to the increasing interest of donors, and especially wealthy donors, foundations and even corporations, in funding higher education, as well as a growing role for philanthropy in K-12 education,” the report added.

Additional resources for business accounting tips are available here

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The Southbourne Tax Group: 7 Tips For Preventing Invoice Fraud

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The Southbourne Tax Group: 7 Tips For Preventing Invoice Fraud

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The Accounts Payable department is a prime target for fraud. Criminals looking to exploit your business take advantage of AP departments buried in paperwork to submit phony invoices and hope they’ll slip by as legitimate.

A single fraudulent invoice might not impact your company too much. However, over time invoice fraud can become quite a costly problem. Foiling invoice fraud is often frustrating, but implementing these tips will significantly reduce the risk of your company falling victim.

1) Employ 3-Way Matching

If you can match each invoice to a purchase order and receipt of goods, then you’re much less likely to pay a fraudulent invoice. Most fraudsters won’t bother fabricating three separate documents.

2) Watch Invoice Amounts

Amounts on invoices can provide clues that the invoice isn’t on the up-and-up. If your company requires additional review for invoices over $1,000 (for example), checks squeaking by right under that threshold (such as $999.98) should raise suspicion.

3) Keep Up Moral

Invoice fraud can come from inside the company or from an outside source. Happy employees are unlikely to commit fraud and more likely to catch fraud from outside sources. If they don’t have reason to complain, then they’re more likely to care about doing right by the company.

4) Check On Vendors

Fraudulent invoices are typically issued under fake business names or use a legitimate name but a fake address or bank account number. You’ll want to look up any new vendors to make sure they’re legitimate and find the address on Google maps. If the address is residential or a post-office box, that’s a big red-flag. Also, check-in with your existing vendors directly if their account information changes.

5) Track Invoice Activity

If you’re tracking invoice activity, you’ll be able to notice when something changes. For example, one vendor typically submits 5 to 10 invoices a month and suddenly you see 50 from them in a single month. It might be legitimate, but you’ll still want to get in touch with them and double-check.

6) Implement “Fuzzy Matching”

Duplicate payments are one way to commit invoice fraud – fraudsters submit a near-perfect copy of a legitimate invoice and hope no one notices one payment is going to a different account number. Sometimes they’ll also change date, invoice number, or amount. You’ll need a program that allows for “fuzzy matching” to catch near-duplicates as well as identical invoices.

7) Employ Automation

Automation in the AP department gives you the tools you need to more effectively implement all these other tips for preventing fraud. It’s probably the single most important step you can take to stop invoice fraud.

With NextProcess’ AP Automation Software, you instantly get detailed insight into everyday invoice processing. Our software automates invoice processing according to your custom specifications. It can catch many sorts of suspicious invoices on its own and gives you the tools you need to more easily track invoice activity and check on vendor information. On top of that, automation software is easy to use and frees up employees for more interesting work. It’s a win-win for the company and everyone in the AP department.

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group - 7 Tips For Preventing Invoice Fraud

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The Southbourne Tax Group: It's tax season, avoid fraud by following these tips

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The Southbourne Tax Group: It's tax season, avoid fraud by following these tips

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The person calling began to threaten the OPP civilian employee that if she did not send money to him, terrible things would happen to her

With tax season on the horizon OPP will be receiving calls from citizens who have been contacted and in some cases, have lost money. If you are contacted over the phone by someone saying they are the Canada Revenue Agency (CRA) here are some tips taken right from the CRA website:

The CRA:

·        never requests prepaid credit cards;

·        never asks for information about your passport, health card, or driver's licence;

·        never shares your taxpayer information with another person, unless you have   provided the appropriate authorization; and

·        never leaves personal information on your answering machine or asks you to leave a message containing your personal information on an answering machine.

When in doubt, ask yourself the following:

·        Is there a reason that the CRA may be calling? Do I have a tax balance outstanding?

·        Is the requester asking for information I would not include with my tax return?

·        Is the requester asking for information I know the CRA already has on file for me?

·        How did the requester get my email address or telephone number?

·        Am I confident that I know who is requesting the information?

When in doubt hang up the phone and call the CRA phone number included on the previous year tax returns or documentation received from the CRA. The number provided on the CRA website is 1-800-959-8281 for individual inquiries.

This story that happened in the late fall and speaks to the randomness of these calls.

A would be fraudster called the Orillia OPP detachment and was greeted by an administrative assistant with "good morning Orillia OPP". The person calling began to threaten the civilian employee that if she did not send money to him, terrible things would happen to her and he was going to be the one to do it.

The randomness comes from the fact that most people from Ontario understand that the OPP stands for Ontario Provincial Police. Many times these calls originate from foreign countries and are intended to scare you into sending money. If you receive one of these calls hang up and call the Canadian Anti-Fraud number at 1-888-495-8501.

If you or someone you know receives an e-mail, phone call or letter demanding money, asking for money, threatening you for money or saying the most terrible thing has happened and they need money to help a loved one please call someone you trust and talk it over with them. Think about the following when receiving an e-mail, phone call or letter:

·        Is it reasonable? Would a police agency call you for money to bail someone out? Would someone notify you of a million dollar win over e-mail?

·        If it's too good to be true it probably isn't true.

·        Just hang up then report it.

·        Call someone else and tell them the story before sending money.

·        Call the agency that is calling you; if you receive an e-mail asking for updated information call the bank or go to the bank and talk to a live person.

·        If there is any doubt call the Canadian Anti-Fraud Centre.

·        Please talk to your relatives about frauds especially elderly relatives as they are more likely to be victims.

Sadly each year Canadians are defrauded of millions of dollars.

If you receive a call, e-mail or letter and know it's a scam please hang up, delete the e-mail or shred the letter. If you have been the victim of a fraud no matter how small please contact the Canadian Anti-Fraud Centre at 1-888-495-8501.

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group: Tips - Against Tax Refund Fraud

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The Southbourne Tax Group: Tips - Against Tax Refund Fraud

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A survey conducted by the data security and identity protection firm found more than half of Americans aren’t worried about tax fraud, despite federal reports showing identity thieves filed 787,000 fraudulent returns in 2016, which adds up to more than $4 billion in fraud.

The survey also found that only 35% of taxpayers ask their preparers to use two-factor authentication (which is stronger than a single password) to protect their information. On top of that, only 18% use an encrypted USB drive to save tax documents that contain sensitive information. When it comes to choosing a tax preparer, 50% of respondents said they chose their tax preparers online, didn’t screen them beforehand or weren’t sure how to evaluate a tax preparer at all. CyberScout said this puts consumers at risk of getting scammed. Finally, more than half (51%) of taxpayers expecting refund checks in the mail don’t use a locked mailbox.

Americans taxpayers are too lax about identity theft, according to CyberScout.

These findings come from a nationally representative survey of more than 1,500 Americans aged 18 and over commissioned by CyberScout, using Google Consumer Survey.

“In tax season, it is crucial that everyone remain vigilant and on high alert to avoid tax-related identity theft or phishing schemes,” said Adam Levin, founder and chairman of CyberScout and author of “Swiped.” Levin is also the co-founder of Credit.com.

How taxpayers can protect themselves

This is one of the busiest times for identity thieves, but there are steps taxpayers can take to protect themselves. Here’s what CyberScout recommends:

- Use a password-protected Wi-Fi connection when filing your taxes. Use a long and complex password – not just for your Wi-Fi but also for any accounts you’re using during the tax-filing process.

- Get your return via direct deposit. If you must receive a return check via mail, have it sent to a locked mailbox.

- Ask your tax preparer to use two-factor authentication to protect your documents and personal information.

- Use an encrypted USB drive to save sensitive tax documents.

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group - Tips - Against Tax Refund Fraud

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The Southbourne Tax Group: Why Tax Refund Fraud Losses Are Growing Rapidly

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The Southbourne Tax Group: Why Tax Refund Fraud Losses Are Growing Rapidly

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Over the past five years, the IRS has been experiencing issues around identity theft. Evidence of stolen identity tax refund fraud, or simply tax refund fraud (TRF), began to emerge as early as 2004 when individuals began submitting fictional tax returns from prison. According to the Treasury Inspector General for Tax Administration (TIGTA), in 2004, prisoners submitted 18,000 returns, which cost U.S. taxpayers $68 million. In 2010, they submitted 91,000 returns, with a loss of $757 million. Over that time, the prisoners also increased the average amount of money they collected, jumping from $3,777 in 2004 to a staggering $8,318 in 2010. Their tax fraud scheme exposed a flaw within the tax filing system.

Organized criminal enterprises understand flaws in the tax filing and refund system that allowed them to exploit procedural weaknesses and reap large returns for their efforts. TRF has evolved into a sophisticated criminal enterprise process with organized fraud rings filing thousands of fraudulent tax returns annually.

Factors Leading to the Growth of Tax Refund Fraud

The advancement of technology has had implications across many facets of TRF. The increase in personal computing power of taxpayers, the evolution of the Internet since the early 1990s, the ability to electronically file tax forms and subsequent growth of third-party tax filing services and the ability to receive tax refunds via direct deposit (including prepaid debit cards) have all been major contributing factors to the growth of TRF. Additionally, the conversion of personally identifiable information (PII) to digital records has created an opportunity for cybercriminals to steal PII in large quantities, as evidenced by recent health care provider and government agency data breaches.

The IRS has offered and allowed direct deposit of tax refunds since the 1980s; however, it never built systems to confirm that deposits were being made to an account of the same name as the tax filer. In 2008, TIGTA reported that “the IRS has not developed sufficient processes to ensure that more than 61 million filing season 2008 tax refunds were deposited into an account of the name of the filer.” In fact, TIGTA found that the IRS was not in compliance with direct deposit regulations. The IRS claimed that it was the responsibility of the taxpayer to ensure compliance — which obviously played into the fraudsters’ hands.

The problem of multiple direct deposits to one account was evident in a 2012 report in which an analysis of 2010 data indicated that 4,157 direct deposit refunds totaling more than $6.7 million went to just 10 accounts.

A corresponding July 2012 TIGTA report recommended that the IRS limit the number of direct deposits to one account. The IRS agreed with that suggestion and instituted a limit of three direct deposits to one account for the 2015 filing season.

A New Trend Takes Hold

Around 2010, a new trend emerged centering around true identity theft. Based on lessons learned from the prisoner tax filing scam, organized criminal groups (OCGs) focusing on TRF began to emerge. OCGs from street gangs to international crime groups learned that they could make a lot money with little risk involved. The OCG would obtain true identity information about a taxpayer, which is otherwise known as “FULLZ” in Dark Web marketplaces. The OCG would then submit a tax return in the victim’s name with fictitious employment and wage documents to support it.

Since two returns cannot be filed for the same person in one year, once the victim would submit a true tax return it would be rejected, alerting them to the identity theft. One of the issues at hand is that the IRS does not reconcile wage documents from individual returns to those supplied from employers until six to nine months into the year. According to TIGTA, the IRS may have paid $5.2 billion in potentially fraudulent tax refunds on 1.5 million tax returns in 2010.

So Where Does One Get FULLZ Information?

FULLZ information is readily available from many places. These include data breaches, retail stores, health care records and more. Once cybercriminals get access to this data, they will then put the information into a website marketplace that allows fraudsters to access any of the data that is available for a price. Many of these websites are in what is known as the Dark Net or Dark Market. The Dark Net listings provide fraudsters with all the information they would need to execute TRF.

If you are a novice or would-be fraudster, there are websites that will provide a how-to tutorial for committing TRF. The pictures below are examples of a few websites that teach people each step of TRF, from getting a person’s PII and opening a bank account in that individual’s name to actually submitting a fraudulent tax return and receiving an illicit refund.

Another important thing to note is that rules, regulations and silos within companies hinder the organizations’ ability to effectively communicate, share information and limit the losses from TRF. However, the bad guys are not hindered by any such rules and regulations. They are free to communicate among themselves about successes, failures and other conditions that will help refine their processes to be more successful. This is usually done in Dark Net chat forums. In these forums, criminals are free to discuss what was successful and what was not.

Technology has made it increasing easy for fraudsters to commit their crimes anonymously. The Internet and phone channels provide areas that can be used to grant anonymity. On the Internet there are many products that provide virtual private network (VPN) services to hide the true identity and IP address of the bad actor; two of the best known are Tor and I2P.

Data Breaches Fuel the FULLZ Supply

All data breaches are not created equally. Some of the large retail breaches over the last 18 months, while significant, do not pose as much of an identity theft risk as the more recent health insurer and government data breaches. Some of the high-profile retail breaches involved payment card compromises, which would allow a fraudster to create and use counterfeit cards. Typically, card issuers will bear losses associated with counterfeit card use, sparing consumers any financial burden. However, data breaches that involve complete PII records of consumers present a high risk of identity theft and TRF.

Until recently, the compromise of full PII data often came from malicious insiders with access to consumers’ information. Insiders at banks, medical offices, schools and other organizations that possess PII help provide access for criminal enterprises. Large-scale data breaches at health insurers and government agencies have provided a tremendous supply of consumer PII to cybercriminals looking to execute TRF.

So far in 2015, more than 100 million PII records have been compromised through health care and government data breaches alone. For example, the IRS announced that the breach of its Get Transcript system may have included the PII of 334,000 taxpayers. Unlike payment card compromises, these breaches may have profound negative effects to individuals for years to come.

IRS Attempts to Control the Issue

In response to TIGTA’s direct deposit concerns, the IRS introduced limits on Automated Clearing House (ACH) deposits for the 2015 tax season. It implemented new procedures about how money would be sent to accounts by ACH and by check. For instance, a new direct deposit refund request limits the number of refunds that can be deposited into one bank account to three. After three deposits into one bank account, the IRS will convert any subsequent direct deposit refund requests to a paper check and mail the check to the taxpayer’s address. Also, the IRS is limiting the number of bank accounts among which a taxpayer can split one refund to no more than three.

These changes were implemented in an effort to curb TRF. However, the reforms did not achieve the intended result because fraudsters adapted their tactics to exploit systematic weaknesses. The issues that arose for the 2015 tax season are twofold:

1. Workarounds With Tax Preparation Services

The master accounts associated with tax preparation services are a weakness in the system to which fraudsters navigated once the IRS instituted the direct deposit limitations. When an individual files a tax return with a refund through some of the popular tax preparation services, the refunds are often routed from the IRS to the tax preparation company, which then sends it to the individual’s bank and account of record.

Through this method of filing, fraudsters were able to bypass the direct deposit limits. Refunds processed through master accounts do not contain robust event descriptions. The lack of event descriptions means the banks can’t detect and stop these refunds since they have no information from which to validate and match information to the bank account.

2. Financial Institutions Cannot Help Monitor for Fraud

The direct deposit limits took financial institutions out of the game with regard to being a detection point. An ACH deposit coming from the IRS to a bank contains a robust event description including the name, address and Social Security number of the beneficiary. Financial institutions were in a position to detect suspicious activity of multiple deposits going to one account for the benefit of individuals not named on the account.

As with many regulations and controls designed to stop fraud, there are unintended consequences. As a result of criminals’ ability to adapt to the ACH limitations, they found another way. Their new methods resulted in a higher success rate and increased losses to U.S. taxpayers.

What Does This Mean for the Future?

TRF is expected to increase dramatically for this tax season. According to the IRS, fraud losses will reach a staggering $21 billion by 2016, while just two years ago, losses were $6.5 billion.

Recent large-scale PII data breaches will contribute to the growth of TRF. Although the IRS is making changes to try to limit fraud, there are still structural weaknesses in the process that will allow this activity to continue.

Are There Solutions to the Tax Refund Fraud Issue?

No one solution will stop tax refund fraud, but it can be slowed down and its losses limited. The focus should be on better fraud detection capabilities. The detection process should be built like an onion with multiple layers and parties involved. Proposed cuts of the IRS’ budget by more than $800 million for fiscal year 2016 may make it increasingly difficult for the agency to create a better detection strategy, however.

Limiting the number of direct deposits to one account is a good start. However, financial institutions need to be brought into the detection loop. The refund process via master accounts must be enhanced to the point where the name, address and Social Security number of the beneficiary are included in the event description of the ACH transaction between the master account and the receiving bank. Once that is done, banks can build fraud strategies to identify multiple deposits to one account.

The IRS, financial institutions, tax preparation service companies and card companies should work together to devise and implement detection controls that may allow each party to potentially identify suspicious activity, raise red flags and halt the refund process to allow for identity verification. With a detection process that includes all these parties, there will be three different industries that can review refund transactions at different points in the process. This could significantly decrease the losses that are seen with tax refund fraud.

Additional resources for business accounting tips are available here

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The Southbourne Tax Group: Adjustments After Nuptials - Tax Tips!

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The Southbourne Tax Group: Adjustments After Nuptials - Tax Tips!

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June had the reputation as being THE wedding month of the year and flowers were everywhere. Now it seems like wedding season goes from early spring to late summer. Whether they’re traditional with a bunch of flowers or have a Harry Potter theme, weddings strive to be a happy occasion for all parties involved and guests invited. They can also, however, be quite stressful! Between trying to plan a wedding, staying within budget, finding the perfect dress and finalizing plans, it can be an overwhelming task! Not to mention that two people’s lives are going to change, so it’s understandable that a few things might fall to the wayside.

While trying to choose the right flowers for the bouquet, which flavor of cake to have, and planning a seating chart, no one really has time to think about everything they need to do after festivities and honeymoon. Besides, who wants to think about name changing forms when a sandy beach with fruity drinks is calling their name? There’s other important things to do, too, like writing thank you notes and trying out all the new gadgets family and friends gave you.

When the fun dies down, though, we’re here to give all newlyweds a friendly reminder of tedious tasks to consider and or do once they’re married. So first things first! Some people really like the whole name change idea that is associated with getting married; you know, at some point we all tried out how our name would flow with some hottie we admired by scribbling it all over our school notebooks.

A new name can be exciting, but keep in mind that for tax purposes, your name, social security number and tax return all have to match. Therefore, take a few minutes to report your new name to the Social Security Administration and file a Form SS-5. Make sure you have a copy of your driver’s license or passport and your marriage certificate because you’ll need them. Lastly, the SSA will take about two weeks to process the name change so try not to make your name change too close to the tax season because data sharing between the IRS and the SSA can be problematic towards the end of the year.

Another tip to keep in mind is to make sure your address is up-to-date if you move after the nuptials. There are some types of federal and certified mail that the postal service won’t forward to a new address. Seems like a no brainer, but for newlyweds coming fresh off a honeymoon and go right into a big move, it can be easy to forget to notify the postal service. Further, report to your employer any name or address changes to make sure you receive your Form W-2 after the end of the year.

Now here’s the nitty gritty; filing a tax return after you’re married. The combined income for you and your spouse could potentially put you in a new tax bracket. If that’s the case, use the IRS Withholding Calculator to see if you need to file a new Form W-4 for your employer. Then, make sure you choose the right tax form to fill out. Being married, you’ll have enough deductions to itemize your return rather than take standard deductions. Finally, decide which filing status will be most beneficial for you.

For most married couples, there’s a lower tax liability for filing jointly, but the married filing separate option could be more beneficial. For instance, if your spouse has past debt with the IRS or another agency, filing separate will prevent any refund the spouse may get from being used to offset the debt. These little details are easy for anyone to overlook, but as they say, the devil is in the details. Making sure things like names changes and filing correctly are taken care of well before tax time will save you from of heck of a headache!

With all of that out of the way, enjoy the honeymoon period and enjoy being blissfully married!

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group: Red Flags for Audits

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The Southbourne Tax Group: Red Flags for Audits

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The IRS at times seems like a living, breathing entity that’s often the source of bad dreams and stress. With all their rules, regulations, deadlines and forms, the IRS can be a little daunting, and nothing is scarier than the word audit. Often we are asked what are the chances of being audited, how the IRS chooses people to audit, and if whatever change they make in their life will put them on the radar of the IRS. These are all logical questions and completely reasonable to ask.

Unfortunately, the IRS chooses people at random for auditing, but on the other hand, there are some things that can tip the IRS off into auditing you. We’ve compiled a list of things that can tip off the IRS in no particular order that act as red flags so to speak.

-Not reporting all your income

There are numerous ways to receive income outside of what’s listed on a 1099 or W2. You may receive dividends, pension pay from a previous employer, royalties or whatever it may be. The more sources of income you have, the harder it can be to remember to report all of it or easy to overlook it. Any institution to distribute income will report it to the IRS, so make sure you check and double check that all your income has been recorded.

-Breaking the rules of foreign accounts

Foreign accounts sound like something from high budget espionage film, but some people do in fact have them. The law states that it is required for overseas banks to identify American asset holders and provide that information to the IRS. If you have a foreign account, you must report assets worth at least $50,000.

-Burring lines on business expenses

It’s a great tax advantage to be able to write off business expenses, however, the IRS has gobs of data upon data about typical business expenses. In laymen terms, they know when someone is spending more than what the average is. Tax returns showing 20 percent or more above the normal might get a second look. Therefore, always keep proper documentation of all your business expenses.

-Earning more than $200,000

Higher incomes require more complicated returns that tend to contain audit triggers. The IRS audited 1 percent of those earning $200,000 and almost 4 percent earning more. IF you make more than one million, the chance for an audit increases to 12.5 percent. Again, keeping good paper trails and the proper documentation is a must! This isn’t a bad thing at all, just the nature of the beast in this case.

-Taking large charitable deductions

Just like business deductions, the IRS has gobs of data about typical charitable contributions people at every income level usually make. If someone tries to deduct a contribution that’s largely disproportionate to their income level, eyebrows might raise. When donating, make sure you get the right paperwork for your own records and make sure to file a form 8283 for noncash donations over $500.

-Taking an early payout from an IRA or 401k

Red flags get raised if payments are taken out before 59.5 years of age and you can be subject to a 10 percent penalty on top of regular income tax. There are ways to get around the penalty for things like large medical costs and total and permanent disability, but otherwise, it’s best to not touch the pension plans.

If they see a common mistake popping up, the IRS is liable to look deeper into returns if they think those mistakes were made. There are any number of reasons the IRS may look deeper into someone’s tax return for auditing. The list we provided are not the only reasons, but are common reasons. The IRS still keeps it random, probably just to keep people on their toes, but keep in mind the IRS likes to change a lot. With proper documentation and accurate records, don’t worry about auditing!

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group: How to Protect Your Identity and Assets

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The Southbourne Tax Group: How to Protect Your Identity and Assets

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Tax Fraud Awareness

The IRS, taxpayers and tax preparers share a common enemy: identity thieves. We all have a part to play in the fight against tax-related identity theft. Your role starts by learning the mechanics and warning signs. From there, taxpayers can take proactive steps to protect their data online and at home.

Understand How Tax Fraud Happens

Dishonest individuals may steal taxpayers’ personal and financial information from sources outside the IRS, such as social media accounts where people tend to share too many details or bogus phishing emails that appear to come from the IRS or a bank. Once they obtain an unsuspecting taxpayer’s data, thieves may use it to file fraudulent federal and state income tax returns, claiming significant refunds.

Paperless e-filing facilitates these scams: Thieves submit returns electronically, based on falsified earnings, and receive refunds via mail or direct deposit. Sure, the IRS maintains records of wages and other types of taxable income reported by employers, but they don’t usually match these records to the information submitted electronically before issuing refund checks. By the time the IRS notifies a victim that it’s received another tax return in his or her name, the thief is long gone and has already cashed the refund check.

In addition to refund fraud, thieves may use stolen personal information to access existing bank accounts and withdraw funds — or open new ones without the taxpayer’s knowledge. Criminals are becoming increasingly sophisticated and their ploys more complex, making identity theft harder to detect.

Recognize the Warning Signs

Taxpayers are the first line of defense against these scams. The IRS lists the following warning signs of tax-related identity theft:

Your electronic tax return is rejected. When the IRS rejects your tax return, it could mean that someone else has filed a fraudulent return using your Social Security number. Before jumping to conclusions, first check that the information entered on the tax return is correct. Were any numbers transposed? Did your college-age dependent claim a personal exemption on his or her tax return?

You’re asked to verify information on your tax return. The IRS holds suspicious tax returns and then sends letters to those taxpayers, asking them to verify certain information. This is especially likely to happen if you claim the Earned Income tax credit or the Additional Child tax credit, both of which have been targeted in refund frauds in previous tax years. If you didn’t file the tax return in question, it could mean that someone else has filed a fraudulent return using your Social Security number.

You receive tax forms from an unknown employer. Watch out if you receive income information, such as a W-2 or 1099 form, from a company that you didn’t do work for in 2016. Someone else may be using the phony forms to claim a fraudulent refund.

You receive a tax refund or transcript that you didn’t ask for. Identity thieves may test the validity of stolen personal information by sending paper refunds to your address, direct depositing refunds to your bank or requesting a transcript from the IRS. If these tests work, they may file a fraudulent return with your stolen data in the future.

You receive a mysterious prepaid debit card. Identity thieves sometimes use your name and address to create an account for a reloadable prepaid debit card that they later use to collect a fraudulent electronic refund.

Take Preventive Measures

You may wonder how many taxpayers file electronic vs. paper returns. “There are 150 million households that file federal and state tax returns involving trillions of dollars…. More than 90% of these tax returns are prepared on a laptop, desktop or even a smartphone — whether they’re done by an individual or a tax preparer. This is a massive amount of sensitive data that identity thieves would love to get access to.… With 150 million households, someone right now is clicking on an email link they shouldn’t, or skipping an important computer security update, leaving them vulnerable to hackers,” said IRS Commissioner John Koskinen in a recent statement about the Security Summit Group. (See “IRS Creates Security Summit Group” above.)

How can you actively safeguard your personal data online and at home? Here are four simple ways to thwart tax-related identity theft:

1.       Keep your computer secure. Simple, cost-effective security measures add up. For example, use updated security software that offers firewalls, virus and malware protection and file encryption. Be stingy with personal information, giving it out only over encrypted websites with “https” in the web address. Also back up computer files regularly and use strong passwords (with a combination of capital and lowercase letters, numbers and symbols).

2.       Avoid phishing and malware scams. Be leery of emails you receive from unknown sources. Never open attachments unless you trust the sender and know what’s being sent. Don’t install software from unfamiliar websites or disable pop-up blockers.

3.       Protect personal information. Treat personal information like cash. Don’t carry around your Social Security card in your wallet or purse. Be careful what you share on social media — identity thieves can exploit information about new car or home purchases, past addresses, vacations and even your children and grandchildren. Keep old tax returns in a safe location and shred them before trashing.

4.       Watch out for scammers who impersonate IRS agents. IRS impersonators typically demand payment and threaten to arrest victims who fail to ante up. The Federal Trade Commission recently issued an alert about police raids on illegal telemarketing operations in India that led to the indictment of dozens of IRS impersonators. Remember: The IRS will never call to demand immediate payment, nor will they call about taxes you owe without first mailing you a bill.

Another simple way to prevent someone from filing a fraudulent return is simply to file your return as soon as possible. The IRS begins processing tax returns on January 23. If you file a tax return before would-be fraudsters do, their refund claims are more likely to be rejected for filing under a duplicate Social Security number.

Join the Fight

The deadline for filing your 2016 return is fast approaching. The IRS expects more than 70% of taxpayers to receive a refund for 2016, and it’s on high alert for refund fraud and other tax-related identity theft schemes. You can help the IRS in its efforts to fight tax fraud by watching for these warning signs and safeguarding your personal and financial information.

Additional resources for business accounting tips are available here

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The Southbourne Tax Group: Educational Tax Tips

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The Southbourne Tax Group: Educational Tax Tips

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I’m sure growing up you heard your parents say that education was the key to success. Whether that meant going to college, vocational school or having an internship or apprenticeship, education was always the answer for good, stable futures. However, schooling at all levels can be rather expensive. There’s crayons, pencils and notebooks to buy, new clothes to buy, tuition to pay for, paying for room and board and even meal plans. It can be quite expensive and adds up really quick, but surprisingly enough, there are tax benefits for knowledge! So to add to your knowledge are some tax tips to keep in mind. As they say, knowledge is power…and at times financially beneficial!

First and foremost is the easiest tip that probably everyone knows about; tax free weekend. In Virginia, this year (2016) tax free weekend was August 5 through August 7. It’s a three-day event where there is no sales tax on qualified items such as most school supplies, clothing and shoes, and even things like first aid kits and batteries. It’s a nice little perk, and tax break, to help parents load up on much needed school supplies and that’s only the beginning!

Did you know there is a tax credit where before and after school care can be deducted for children under thirteen? Babysitters, summer camp or other care providers may qualify for the tax credit of up to 35 percent of qualifying expenses of $3,000 for one child or up to $6,000 for two or more dependents. The tax credit was designed to help working parents with some of the expenses involved with raising children and the credit helps reduce the amount of federal income tax, which can then increase a taxpayer’s refund.

Educational saving plans, such as 529 plans, are also something designed to help parents have some extra funds for education in terms of college and university. These plans are specifically geared towards education and are not federally taxable. Further, withdraws from the account are not taxable as long as the money is used for college expenses such as textbooks, computer, calculators, etc.

Even with something like a 529 plan, sometimes further assistance by way of student loans is necessary. There’s not much to be excited about where student loans exist, but there is a slight silver lining to them. For instance, when filing your taxes, make sure you list the interest you’ve paid on the loan because up to $2,500 can be deducted within a given year. Yippee!

If you do have a student loan, you should receive a 1098T, and it’ll let you know the amount of interest you’ve paid. This nifty little form is also helpful for the American Opportunity Tax Credit (AOTC). This can amount to $2,500 in tax credits and up to 40 percent of the credit is refundable. This is available for the first four years of post-secondary education (vocational school, college and graduate school) and eligible expenses include tuition, books and required supplies, not room and board. AOTC is intended to help offset college expenses but keep in mind there’s an income limit attached to this credit.

We just wanted to give our beloved clients a heads up on some options they may have when it comes to their children’s education, or if they themselves are thinking about further education. While education can be spendy at times, but we try to help lessen the stress of it if when we can!

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group - Educational Tax Tips

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The Southbourne Tax Group: Stopping tax identity theft - Practical advice for CPAs and clients

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The Southbourne Tax Group: Stopping tax identity theft - Practical advice for CPAs and clients

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Tax return and other tax-related identity theft is a growing problem that CPAs can help their clients with—both in taking preventive actions and in correcting problems after an identity thief has struck. Tax return identity theft occurs when someone uses a taxpayer’s personal information, such as name and Social Security number (SSN), without permission to commit fraud on tax returns to claim refunds or other credits to which a taxpayer is not entitled, or for other crimes.

Thieves normally file early in the tax-filing season, often before the IRS has received Forms W-2 or 1099, to thwart information matching and avoid receiving duplicate return notices from the IRS. Taxpayers sometimes discover they are victims of identity theft when they receive a notice from the IRS stating that “more than one tax return was filed with their information or that IRS records show wages from an employer the taxpayer has not worked for in the past” (FS-2012-7 (January 2012)).

In 2011, the IRS processed about 145 million returns. About 109 million were claims for refunds, with an average refund amount of almost $3,000. As of May 16, 2012, the IRS had pulled 2.6 million returns for possible identity theft, and that trend is on the increase. The IRS recently reported an inventory of more than 450,000 identity theft cases. For the 2011 filing season, the Treasury Inspector General for Tax Administration (TIGTA) estimated that identity-theft-related fraud accounted for approximately 1.5 million tax returns in excess of $5.2 billion.

CONSEQUENCES OF IDENTITY THEFT

Tax return identity theft delays legitimate taxpayer refunds because the return appears to be a duplicate return and may be a sign of other fraud or identity theft problems. IRS support to solve traditional and nonfraud problems may be delayed as well when IRS resources are diverted to combat identity theft. Other tax-related identity theft can cause problems for the taxpayer as well. If an individual fraudulently used a taxpayer’s SSN to get a job, the taxpayer may have extra W-2 wages erroneously reported (and perhaps also extra taxes withheld), leading to a correspondence matching audit. The National Taxpayer Advocate notes that time and money are spent to clear the individuals’ names, during which “victims may lose job opportunities, may be refused loans, education, housing or cars, or even get arrested for crimes they didn’t commit” (IRS Publication 4535, Identity Theft Prevention and Victim Assistance).

Further, until recently, the IRS would hold suspicious refunds while verifying the underlying W-2 information, for up to 11 weeks. With the increase in the number of cases and budget limitations, refunds may take longer. So, the IRS says, “[I]dentity theft can impose a significant burden on its victims, whose legitimate refund claims are blocked and who often must spend months or longer trying to convince the IRS that they are, in fact, victims and then working with the IRS to untangle their account problems” (IR-2012-66).

A typical identity theft starts when thieves have (illegally) bought or stolen information from individuals, employers, hospitals, or nursing homes or have used the public list of deaths with SSNs issued by the Social Security Administration. With a number or list of numbers, they file false tax returns for refunds. For example, investigators found a single address that was used to file 2,137 tax returns for $3.3 million in refunds (see TIGTA Rep’t No. 2012-42-80). Most thieves prefer to receive the refund using direct deposit or prepaid debit cards. In another example, 590 tax refunds totaling more than $900,000 were deposited into a single bank account. Although banks have strict rules to verify the identity of account holders, they don’t have the ability to monitor whether the direct deposit is for a legitimate refund.

Although the IRS planned to spend about $330 million in 2012 to combat identity theft, the IRS has limited resources and needs additional funding to combat this problem. Identity theft also happens to tax systems in other countries, but the extent of the problem is lessened in countries where the government can immediately (or in “real-time”) match income and withholding with the tax return. IRS Commissioner Douglas Shulman called for real-time matching in his prepared remarks at the AICPA Fall 2011 National Tax Conference for the purpose of reducing the number of taxpayer audits, but such a system should help reduce identity theft fraudulent tax returns as well (IR-2011-108).

IDENTITY THEFT IN THE MAKING: HOW ID IS STOLEN

Common ways to obtain personal information include email or telephone phishing and Dumpster diving. Thieves are looking for “discarded tax returns, bank records, credit card receipts or other records containing personal and financial information” (FS-2008-9 (January 2008)). For example, some taxpayers receive email messages allegedly from the IRS advising them that they are under investigation or have a refund pending. To get the victim to respond, the email may threaten a dire consequence (see Exhibit 1 for a typical phishing message). Often, the recipient is asked to click on a link to access what appears to be—but is not—the legitimate IRS website.

The IRS does not send unsolicited, tax-account related emails to taxpayers and never asks for personal and financial information, including PINs and passwords, via email. The IRS advises that “[s]ince the IRS rarely contacts taxpayers via e-mail, and never about their tax accounts, taxpayers should be cautious about any e-mails that claim to come from the IRS” (FS-2008-9). (People receiving a suspicious email from the IRS are encouraged to report the email by calling the IRS at 800-829-1040 or forwarding the email to phishing irs; note in Exhibit 1 how the email uses “irs.org” not “irs.gov.”)

IDENTITY THEFT DETECTION: HOW IDENTITY THEFT IS CAUGHT

The IRS has several filters that address different issues. These filters are designed to distinguish legitimate returns from fraudulent ones and to prevent the recurrence of identity theft. If a tax return is caught by a filter, it is manually reviewed to validate the taxpayer’s identity. If the IRS identifies a suspicious return, it corresponds with the taxpayer to verify the correct information. Alternatively, if a second, unauthorized person is using the taxpayer’s SSN, the taxpayer may receive a correspondence audit notice informing the taxpayer that he or she failed to report income from another (erroneous) employer.

When a taxpayer’s identity has been stolen, the legitimate taxpayer may be issued a confidential identity protection PIN (IP PIN) that identifies the taxpayer as the legitimate party using the SSN and other identifying information. The IRS issues these numbers to taxpayers who have reported that their identities have been stolen, verified their identities, and had an identity theft indicator applied to their accounts. Not all victims of identity theft will receive an IP PIN—the IRS says that taxpayers who submitted Form 14039, Identity Theft Affidavit, and proper documentation or taxpayers whom the IRS has itself identified as victims will receive them. During the 2012 filing season, the IRS issued 250,000 IP PINs, up from about 54,000 the year before. Once the IP PIN has been issued, it must be present and correct on the specific tax return for which it was issued. For the 2012 tax year, the six-digit IP PIN is inserted at the bottom of page 2 of Form 1040, to the right of the taxpayers’ signatures.

If two taxpayers are married filing jointly and each taxpayer receives an IP PIN, the couple should use the IP PIN of the SSN that appears first on the tax return. Tax preparation software is generally equipped to ask taxpayers if they received an IP PIN. If a taxpayer is filing a printed copy of the return, however, this number will not print, and should be handwritten in the space provided. A request for an extension or installment agreement using an IP PIN must be made on paper, but the tax return may still be filed electronically.

A new IP PIN is issued every subsequent year as long as the theft indicator remains on the legitimate taxpayer’s account. Returns with an IP PIN are processed more efficiently, in that they bypass the regular filtering system, and the IP PIN prevents fraudulent returns from being processed. The IRS began a pilot program in 2010 to mark the accounts of deceased taxpayers to prevent misuse by identity thieves.

IDENTITY THEFT CORRECTIVE ACTIONS: WHAT TO DO IF AN IDENTITY IS STOLEN

As trusted financial advisers, CPAs may be asked what to do if a client’s identity is stolen. The CPA should consider advising or helping the client with several steps:

1.For tax and nontax identity theft, report the theft to the Federal Trade Commission at 877-438-4338 or TTY 866-653-4261.

2.File a report with the local police.

3.Close any affected bank and credit card accounts.

4.Inform the credit bureaus and consider putting a credit freeze on the accounts. A credit freeze restricts access to credit reports, making it unlikely that thieves can open new accounts in the client’s name. Credit freeze laws vary from state to state.

5.If personal information is lost or stolen during the year, contact the IRS Identity Protection Specialized Unit at 800-908-4490, and complete Form 14039, if necessary. Expect to be patient, though. The National Taxpayer Advocate noted in her semiannual report that “this unit has been unable to answer about two out of every three calls it has received from taxpayers so far this year. At times during the filing season, it was answering only about one out of every nine calls it received—and those who managed to get through waited an average of over an hour to speak with an employee.”

6.Respond to all IRS notices immediately, using the name and number printed on the notice.

7.Tax preparers should ask their clients if they received an IP PIN.

IDENTITY THEFT PREVENTION TECHNIQUES

Since identity theft is so prevalent and growing, a CPA may consider providing general preventive advice through newsletters, websites, and other communications. This advice may include:

1.Have clients arrange for masked SSNs where possible, e.g., on insurance cards, so that client SSNs are closely protected and circulated as little as possible.

2.Watch credit reports from the three major credit bureaus; consider offering this as an off-season service or adding a timely reminder with contact information to the firm newsletter. (Contact details for the fraud departments of the three major credit bureaus are: Equifax – 800-525-6285; Experian – 888-397-3742; and TransUnion – 800-680-7289.)

3.Advise clients to forward all information appearing to be from the IRS promptly and to not click on links or open attachments from emails claiming to be from the IRS.

4.Advise clients to safeguard their Social Security cards, store them in a safe and secure location, and not discard any documents with an SSN on them.

5.Advise clients to resist giving businesses an SSN or other personal information just because they ask for it; often it is not required, and dissemination of SSN information is risky.

6.Advise clients to protect financial information by investing in and using a shredder before discarding documents.

7.A taxpayer should secure personal information in one’s own home. For example, copies of tax returns can be kept in a locked file cabinet or safe.

8.Taxpayers should protect personal computers by using firewalls and anti-spam or anti-virus software, updating security patches, and regularly changing passwords for internet accounts with sensitive information, such as online banking sites.

CPAs may be able to take additional preventive steps for tax returns, where the client is cooperative:

1.File clients’ returns early if possible.

2.E-file returns to be notified of duplicate return notices more quickly.

3.Consider truncating or masking SSNs on Forms 1098, 1099, and 5498 consistent with Notice 2011-38.

4.Communicate with the client to change client expectations: Refunds might take longer in future years as additional system security steps are taken.

5.Finally, CPAs with new online clients should be very careful to confirm the identity of those new clients, so that an identity thief cannot trade on an unwitting CPA’s credibility in filing false returns.

CPAs can find additional information at:

·         IRS website, and

·         IRS resources including the Taxpayer Guide to Identity Theft page, or the Identity Protection page.

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group: Fraud prevention – 2017 predictions

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The Southbourne Tax Group: Fraud prevention – 2017 predictions

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Challenges and Opportunities

The Paypers has invited various thought leaders to share their views on 2017 predictions regarding security threats and fraud management solutions

Monica Eaton-Cardone, Global Risk Technologies: Criminal fraud, in the form of unauthorised transactions, will remain an ever-present threat

Criminal fraud, in the form of unauthorised transactions, will remain an ever-present threat. Fortunately, though, technologies have made it easier to mitigate this type of fraud. The threat will continue, but it is a manageable concern. Conversely, another type of fraud continues to go unmitigated. Friendly fraud, which is unwarranted or illegitimate chargebacks, is growing at an alarming rate—as much as 50% annually in certain regions and industries. To date, this threat has remained relatively unmitigated.

Fortunately, we are identifying new techniques that are proven effective at preventing illegitimate chargebacks and recovering unnecessary revenue loss. First, merchants need to identify the cause of each chargeback. Identifying the source of a problem is the only way to effectively mitigate it—otherwise, solutions merely address the symptoms. Technologies like Chargebacks911’s Intelligent Source Detection make this possible.  Second, once merchants have identified the chargeback sources, they need to dispute known cases of friendly fraud. Disputing illegitimate chargebacks effectively challenges faulty consumer behaviours.

Lastly, the industry needs standardisation and compliance. Programmes piloted by schemes to address these concerns are apt to provide good feedback. Without more attention on identifying the underlying source of this growing problem, consumer expectations will threaten sustainable growth industry-wide.

Jason Tan, Sift Science: Stolen identities or accounts are attractive to fraudsters because they offer a richer form of data than simple payment details

While companies are making strides in fighting payment fraud, there are still some worrying gaps when it comes to combating the new frontier of fraud, account takeover (ATO). Nearly half (48%) of respondents to the Sift Science Fraud-Fighting Trends 2017 survey reported that they saw a rise in ATO last year. And with large-scale data breaches showing no sign of slowing down, there should be plenty of fodder floating around on the dark web for criminals to use in their attacks.

Stolen identities or accounts are attractive to fraudsters because they offer a richer form of data than simple payment details. Non-payment data like login information, birth dates, social security numbers, and security questions can be used to create more accounts, make purchases, or even sign up for new credit cards.

From the standpoint of a merchant or financial institution, ATO is particularly concerning since these fraudsters may take the guise of some of your most trusted customers. However, machine learning and behavioral analysis can help unearth the subtle nuances that separate a real, valuable user from an imposter – so you can stay ahead of the game.

Luke Reynolds, Featurespace: It’s time to embrace machine learning to identify new fraud attacks as they occur while protecting your customers and revenue

Do not treat your customers like criminals. That is the big differentiator for banks and payment processors that want to get ahead. Criminals are advancing faster than existing fraud systems can cope with. Machine learning and advanced anomaly detection are the answer to preventing new fraud attacks, while accepting ‘good’ business from genuine customers.

One type of fraud attack increasing within financial services is Authorisation Stream attacks, where criminals manipulate the standard authorisation message, impacting payment processors upstream of where fraud systems usually spot an attack at transaction stage.

Social Engineering attacks on the elderly and vulnerable are also an increasing threat – where genuine banking customers are manipulated via phone by a criminal impersonating the bank.

Financial Services organisations are typically already capturing data needed to protect customers from these attacks. However, to do so, organisations need to be identifying anomalies accurately and efficiently at the level of accounts, merchants, cardholders and locations.

The good news? Machine learning systems – which use adaptive behavioural analytics to monitor individuals in real-time and detect anomalies – enable organisations to understand behaviour across their customer base. It’s time to embrace machine learning to identify new fraud attacks as they occur, while protecting your customers and revenue.

John Karantzis, iSignthis: The convergence of 4AMLD and PSD2 can lead to proactive solutions that mitigate fraud

Are companies ready for even more sophisticated fraud attacks? Unfortunately, it appears not, as card fraud has continued to rise around the world, with fraudsters becoming more sophisticated and harder to catch than ever.

In 2015, we saw more than USD 16.31 bln lost to card fraud globally, with a significant proportion of this being within SEPA. Whilst more and more predictive or risk-based solutions are released to the market each year to protect businesses from fraud, the fraud statistics are not decreasing.

Clearly, relying on risk-based assessment or predictive systems such as ReD, Kount, Cybersource, are proving to be less and less effective, and often lead to false positives or false negatives.

In response, regulators have introduced the Payment Services Directive 2 (PSD2), which incorporates a requirement for ‘Strong Customer Authentication’ (SCA) for every payment transaction. SCA however, relies upon Knowing Your Customer, which for transactions originating outside of SEPA can be extremely challenging. The strengthening of the transparency rules regarding identity has been introduced to tackle terrorism financing, tax avoidance and money laundering, which in turn will also address the adjacent issue of card not present (CNP) fraud. The convergence of 4AMLD and PSD2 can lead to proactive solutions that mitigate fraud, which in turn increases merchant’s confidence to pursue exporting and revenues from outside the SEPA.

The iSignthis Paydentity solution adds a layer of proactive defence for merchants against sophisticated CNP attacks, in addition to providing a basis for compliance for the 4AMLD and PSD2.

Additional resources for business accounting tips are available here

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The Southbourne Tax Group: IRS Making Strides in Detecting Fraudulent Tax Returns

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The Southbourne Tax Group: IRS Making Strides in Detecting Fraudulent Tax Returns

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The IRS has improved its identification of fraudulent tax returns that involve identity theft, but the agency needs to be more accurate in its identity theft estimates, according to a new report from the Treasury Inspector General for Tax Administration (TIGTA).

TIGTA performed an audit to determine how effective the IRS is at detecting and preventing identity theft. The watchdog also looked at how the IRS is measuring undetected identity theft and coordinating identity theft information with other agencies and tax industry partners.

TIGTA identified 568,329 undetected potentially bogus tax returns with refunds totaling more than $1.6 billion for tax year 2013. That’s a drop of more than $523 million from the prior year, the report states.

However, the false reporting of wages and withholding accounts for the largest amount of undetected potentially fraudulent refunds at $1.3 billion. TIGTA believes the new Jan. 31 deadline for employers to file their W-2 forms with the Social Security Administration will reduce this type of fraudulent return.

The new Jan. 31 filing deadline also applies to certain Forms 1099-MISC reporting nonemployee compensation, such as payments to independent contractors.

TIGTA also noted that using states’ lead data during tax return processing could improve detection of identity theft.

TIGTA also discovered that the accuracy of the Identity Theft Taxonomy quantification for both protected and unprotected revenue needs improvement. As an example, the IRS’s estimate of protected revenue was overstated by almost $2.4 billion as a result of the wrong calculation of refunds associated with rejected electronically filed tax returns.

The audit resulted in the following six recommendations, which the IRS agreed with:

1.       Expand the use of identity theft models to include all accelerated W-2s to compare with tax returns for possible identity theft.

2.       Develop criteria to identify and evaluate potential fraud in tax returns.

3.       Develop a way to use state lead data to help evaluate tax returns for identity theft.

4.       Use tax return data to find the refund amount associated with electronically filed tax returns that were rejected when computing revenues, leave out rejected returns that don’t claim a refund, and account for tax returns with multiple reasons for rejection.

5.       Review revenues to ensure that duplicate tax returns are omitted.

6.       Tax returns with mismatched income because of amended or duplicate income documents should not be considered for potential identity theft.

Additional resources for business accounting tips are available here

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The Southbourne Tax Group: Voices Preventing tax-related ID theft

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The Southbourne Tax Group: Voices Preventing tax-related ID theft

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As the owner of a small tax office business, I see tax-related identity theft among others often, but when it happened to my employees as well, I decided to expand the responsibilities of my business to become tax protectors as well as tax preparers. To do this, I needed to educate not only my employees and clients, but first, myself. I was then able to take action that has provided positive results and empowered employees and a loyal customer base.

Tax-related identity theft happens when a taxpayer’s Social Security number is obtained from someone else and used to file a tax return claiming a refund. Thieves may also use a stolen Employee Identification Number from your business clients to create fake W-2s. Both of these actions could support fraudulent refund schemes.

For example, earlier this year at Tampa General Hospital, an employee with access to the personal health information of thousands of patients was found guilty of illegally accessing the personal information of more than 600 patients between June 2011 and December 2012. That information was used to file 29 false tax returns of refunds totaling over $226,000.

So my first step was to become intimately familiar with Publication 5199, Tax Preparer Guide to Identity Theft, and IRS.gov. Most of the information I organized into steps derived from these resources. This helped me to formulate actions when identity theft happens or when fraud is suspected, and finally what measures to take in prevention. My next step was to lay out separate procedures for reporting and prevention.

In either instance, I directed all employees and recommended to clients that they become familiar with the Federal Trade Commission Web site, www.identitytheft.gov, for reporting fraud or protecting their credit.

For prevention of identity theft and fraud, I made it policy for all my employees to mark out the Social Security number and direct deposit bank account information when providing physical copies of returns to clients. This was the most obvious weakness, as it could allow someone simple access in obtaining a Social Security number just through viewing someone’s return. Secondly, I provided referral information to them regarding securing their credit with fraud alerts or a security freeze through the three major credit bureaus, Experian, Equifax and TransUnion. This was something that each employee and client needed to do independently.

Last and most important, I made it mandatory for all tax preparers to obtain certification with the Internal Revenue Service. This was actually easier to implement, as I offered to reimburse my employees for their training and testing. Having certified preparers turned out to be a valuable investment all around as it not only increased their knowledge, but also their job satisfaction.

These are some specific steps I started looking for as warning signs before reporting:

1. When you receive an IRS reject code of R0000-902-01 for one of your clients, this indicates the Social Security number was already used in a previous return.

2. The IRS reports that your client has a balance due, refund offset or a collection action taken for a year in which they did not file.

3. IRS records indicate that your client received wages from an unknown employer.

4. Your business client receives an IRS notice about an amended return, fake employees, or about a bogus business. (Note: The IRS will only communicate with your clients by postal mail. They will never use e-mail or phone!)

5. Lastly, I directed all employees to closely examine all tax forms (i.e., W-2s, 1099s and so on) for physical tampering or alterations, excessive income or federal income tax withheld.

For actual reporting, I took these actions:

1. Instructed employees and clients to never ignore any IRS notice they receive in the mail, and to bring it to the office as soon as possible for action.

2. Assisted employees and clients in completing Form 14039, Identity Theft Affidavit, and faxing or mailing it to the IRS.

3. Requested clients provide a power of attorney on file so I may speak directly to the IRS on their behalf. (I’m working on my Enrolled Agent certification, as this will remove the necessity for this step.)

The last couple of tax seasons have shown that these actions are a win-win for my clients, my tax preparers and my business. Employees are empowered to get real help to our clients on a topic we were not previously prepared for.

I have applied these steps not only to my employees and clients, but to their families, friends and people I’m just meeting for the first time.

These aggressive and direct steps show how much we care, and knowing that someone cares goes a long way in keeping employees and clients reassured during a stressful situation and eventually getting them the help they need. This makes all involved happier and has shown a growth in returning customers.

Establishing identity theft protection and recovery action plans for my employees and clients certainly worked for me. It went a long way to establishing and maintaining positive and trusting relationships.

Make a plan and protect your internal and external interests. Doing so could go a long way in securing your business growth, but most importantly guard against this industry threat.

Additional resources for business accounting tips are available here.

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The Southbourne Tax Group - Voices Preventing tax-related ID theft

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The Southbourne Tax Group: IRS Offers Tips on Choosing a Tax Preparer

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The Southbourne Tax Group: IRS Offers Tips on Choosing a Tax Preparer

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The Internal Revenue Service is cautioning taxpayers to be on the lookout for unscrupulous return preparers, one of the most common “Dirty Dozen” tax scams seen during tax season.

The vast majority of tax professionals provide honest, high-quality service. But there are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. That's why unscrupulous preparers who prey on unsuspecting taxpayers with outlandish promises of overly large refunds make the Dirty Dozen list every year.

"Choose your tax return preparer carefully because you entrust them with your private financial information that needs to be protected," said IRS Commissioner John Koskinen. "Most preparers provide high-quality service but we run across cases each year where unscrupulous preparers steal from their clients and misfile their taxes."

Return preparers are a vital part of the U.S. tax system. About 60 percent of taxpayers use tax professionals to prepare their returns.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shutdown scams and prosecute the criminals behind them.

Choosing Return Preparers Carefully

It is important to choose carefully when hiring an individual or firm to prepare a tax return. Well-intentioned taxpayers can be misled by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee. Every year, these types of tax preparers face everything from penalties to jail time for defrauding their clients.

Here are a few tips when choosing a tax preparer:

·         Ask if the preparer has an IRS Preparer Tax Identification Number (PTIN). Paid tax return preparers are required to register with the IRS, have a PTIN and include it on tax returns.

·         Inquire whether the tax return preparer has a professional credential (enrolled agent, certified public accountant or attorney), belongs to a professional organization or attends continuing education classes. A number of tax law changes can be complex. A competent tax professional needs to be up-to-date in these matters. Tax return preparers aren’t required to have a professional credential. The IRS website has more information regarding the national tax professional organizations.

·         Check the preparer’s qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool can help locate a tax return preparer with the preferred qualifications

·         The Directory is a searchable and sortable listing of certain preparers registered with the IRS. It includes the name, city, state and zip code of:

o    Attorneys

o    CPAs

o    Enrolled Agents

o    Enrolled Retirement Plan Agents

o    Enrolled Actuaries

o    Annual Filing Season Program participants

·         Check the preparer’s history. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory.

·         Ask about service fees. Avoid preparers who base fees on a percentage of their client’s refund or boast bigger refunds than their competition. Don’t give your tax documents, SSNs, and other information to a preparer when only inquiring about their services and fees. Unfortunately, some preparers have improperly filed returns without the taxpayer’s permission once the records were obtained.

·         Ask to e-file your return. Make sure your preparer offers IRS e-file. Paid preparers who do taxes for more than 10 clients generally must file electronically. The IRS has processed more than 1.5 billion e-filed tax returns. It’s the safest and most accurate way to file a return.

·         Provide records and receipts. Good preparers will ask to see your records and receipts. They’ll ask questions to determine your total income, deductions, tax credits and other items. Do not rely on a preparer who is willing to e-file your return using your last pay stub instead of your Form W-2. This is against IRS e-file rules.

·         Make sure the preparer is available. In the event questions come up about your tax return, you may need to contact your preparer after the return is filed. Avoid fly-by-night preparers.

·         Understand who can represent you. Attorneys, CPAs, and enrolled agents can represent any client before the IRS in any situation. Annual Filing Season Program participants may represent you in limited situations if they prepared and signed your return. However, non-credentialed preparers who do not participate in the Annual Filing Season Program may only represent clients before the IRS on returns they prepared and signed on or before Dec. 31, 2015.

·         Never sign a blank return. Don’t use a tax preparer that asks you to sign an incomplete or blank tax form.

·         Review your return before signing. Before you sign your tax return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it and that your refund goes directly to you – not into the preparer’s bank account. Reviewing the routing and bank account number on the completed return is always a good idea.

·         Report abusive tax preparers to the IRS. You can report abusive tax return preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms on IRS.gov.

To find other tips about choosing a preparer, understanding the differences in credentials and qualifications, researching the IRS preparer directory, and learning how to submit a complaint regarding a tax return preparer.

Taxpayers are legally responsible for what is on their tax return even if someone else prepares it.

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The Southbourne Tax Group:  Straight Talk - Be aware of the 'Dirty Dozen' of tax scams

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The Southbourne Tax Group:  Straight Talk - Be aware of the 'Dirty Dozen' of tax scams

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The Canton Regional and Greater West Virginia Better Business Bureau offers tips and advice for consumers to avoid fraudulent practices.

Today's topic: IRS warns of the "Dirty Dozen"

The concern: Every year, the IRS compiles their "Dirty Dozen," a list of common scams that can affect taxpayers at any time of the year, but strike more often during filing season as consumers finalize their tax returns.

How the scam works:

Phishing schemes Criminals pose as a person or organization the taxpayer trusts or recognizes. They may hack an email account and send mass emails under another person's name. They may pose as a bank, credit card company, tax software provider or government agency. Criminals go to great lengths to create websites that appear legitimate but contain phony log-in pages. These criminals hope victims will take the bait and provide money, passwords, Social Security numbers and other information that can lead to identity theft.

Business email compromise (BEC) / W-2 phishing scam Cybercriminals use spoofing techniques to disguise an email to make it appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their W-2s "for a quick review." But it's not real, and those who reply are sending employees' names, Social Security numbers and income information to scammers, who then file fraudulent returns for tax refunds.

Tax identity theft Tax-related identity theft involves scams with the intent to steal personal and financial data from taxpayers or data held by tax professionals. One such way is when a scammer uses a stolen Social Security number to file a fraudulent tax return and claiming the refund. It also happens when someone uses your SSN to earn wages, and sticks you with the tax bill.

Fake charities Groups masquerade as charitable organizations to attract donations from unsuspecting contributors. One type of abuse or fraud involves scams that occur in the wake of significant natural disasters. Scam artists impersonate charities to get money or private information from well-intentioned taxpayers. Scammers can use a variety of tactics; some operate bogus charities and contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.

Tips to avoid these scams:

File early. File your tax return as early as possible to avoid a scammer filing instead.

Be secure. Use a secure internet connection if you file electronically, or mail your tax return directly from the post office.

Know the IRS. The IRS will not contact you by email, text or social media. If the IRS needs information, it will contact you by mail.

Be aware of your credit. Check your credit report for free at annualcreditreport.com to make sure there are no unauthorized accounts.

Protect personal data. Don't routinely carry a Social Security card, and make sure tax records are secure. Treat personal information like cash; don't leave it lying around.

Know phishing. Learn to recognize and avoid phishing emails, threatening phone calls and texts from thieves posing as legitimate organizations such as a bank, credit card company and government organizations, including the IRS. Do not click on links or download attachments from unknown or suspicious emails.

Be informed. To see the remaining "Dirty Dozen" and find more tax-time tips, visit the IRS website.

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The Southbourne Tax Group: Ready to file your 2016 taxes?

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The Southbourne Tax Group: Ready to file your 2016 taxes?

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The 2016 tax filing season has begun, with W-2s arriving in the mail and some confusion arising from news of a refund delay.

While most people will be minimally impacted by changes this year, one of the biggest additions is aimed at helping low-income families.

The California earned income tax credit is entering its second year. The credit applies to people who earn $6,717 or less with no children up to $14,161 with two or more children. To help you get the most out of your taxes, we asked Aaron Martinez, a tax expert with H&R Block since 1998, and Andrew Nelsen, a certified public accountant in Fountain Valley, for tips ahead of the April 18 filing deadline.

REFUND DELAY

Some who file early may be in for a surprise. Those claiming the EITC or a child tax credit – an estimated 30 million taxpayers – will have their refund held until Feb. 15.

“We’re telling everyone to file normally,” Martinez said. “They just have to wait a little bit longer to get their refund.”

The delay, created by the Protecting Americans From Tax Hikes (PATH) Act of 2015, is meant to prevent fraud.

“Those two credits are target credits for identity thieves and fraudsters. The IRS wants to make sure that the W-2s that are coming in are correct and that they have time to make sure there is no theft,” Martinez said.

The IRS estimates that as many as 26 percent of EITC claims may be paid erroneously in 2015. “Some of the errors are unintentional, caused by the complexity of the law, but some of the claims are intentional disregard of the law,” the agency said.

For people who need the refund sooner, H&R Block is offering a $1,250 refund advance, a no-interest loan that’s repaid when the refund is issued by the IRS.

WHAT's NEW

The personal exemption has been increased to $4,050. But that amount is phased out for taxpayers at higher income levels. Similarly, those with higher adjusted gross income might not be able to get the full value of their deductions.

The alternative minimum tax is still around, but the exemption has increased to $53,900 for single taxpayers, $83,000 for those married filing jointly and $41,900 for married filing separately.

People who have been issued an individual taxpayer identification number, or ITIN, instead of a Social Security number may have to renew it before filing their tax returns. The IRS says current ITINs will no longer be valid if they weren’t used at least once in the last three years or if the number was issued before 2013.

Make sure you have last year’s tax return handy when you prepare to file your taxes this year.

“Taxpayers who are changing tax software products this filing season will need their adjusted gross income from their 2015 tax return in order to file electronically,” the IRS said. “The electronic filing PIN is no longer an option.”

That, too, is part of the agency’s attempt to battle tax fraud and identity theft.

CLAIM ALL YOUR CREDITS

Martinez said there are a lot of deductions people forget to take. They include:

--Charitable contributions

--Mortgage interest, property taxes and mortgage insurance

--Employee expenses such as mileage and phone bills

--Education costs: Schools issue a tuition statement, form 1098-T, for eligible deductions

--Filing status: For example, a single mother with a child can file as head of household

--Caring for parents

--Even if you have a degree, the IRS offers a lifetime learning credit of up to $2,000 annually

--Delivery drivers, especially those working for Uber, Lyft and DoorDash, should keep track of miles, oil changes and vehicle repairs as business expenses

PATH ACT

“A big change this year is the PATH Act. This act made some tax changes permanent and made some expire,” Martinez said.

Under the act, the American Opportunity Education Tax Credit, which gives undergraduate students up to $2,500 in tax credits, and some other tax breaks were made permanent.

This is the last year for private mortgage insurance, mortgage debt forgiveness, a tuition and fees deduction, and non-business energy credits.

“Next year is the year that could really be topsy-turvy,” said Nelsen. “Not a whole lot changed this year.”

AVOID SCAMS

To prevent fraud, file your taxes as early as possible, Martinez urges.

The IRS will not ask for your credit card or send the sheriff to your house. Anyone threatening to do so is likely a scammer.

Anyone impersonating the IRS can be reported online at ftccomplaintassistant.gov or by calling 800-366-4484.

EXTENSIONS

Taxpayers who need more time to file can request an extension.

“Getting a filing extension avoids the late filing penalty, but it doesn’t avoid the late payment penalty,” said Barbara Weltman, a consultant and author of books on taxes, law and finance.

So the advice from tax experts: To avoid the late payment penalty, estimate the amount due and pay it before the April 18 deadline. But even with that, you won’t be able to avoid interest on payments made after the deadline.

AFFORDABLE CARE ACT

While Republicans seem committed to repealing the Affordable Care Act, it remains to be seen what might replace it.

In the meantime, people who do not have health insurance should be prepared to pay more this year as penalties for those without coverage have risen.

The penalty for not having insurance is $695 per uninsured adult or 2.5 percent of household income over the filing threshold – whichever is greater. In 2015, it was $325 per uninsured adult or 2 percent of household income.

Enrollees with insurance through the state’s health exchange, Covered California, have to file a 1095-A form with their taxes.

To help with the cost, there are 30 exemptions available for people who are uninsured, according to Martinez.

“It’s in its third year. The first year people didn’t really understand it,” Nelsen said. “The second year penalties really started kicking in, and people started to catch on, so I know it’s on people’s mind this year.”

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The Southbourne Tax Group: Get richer this tax season in 10 easy ways millennials can maximize refunds and avoid costly mistakes

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The Southbourne Tax Group: Get richer this tax season in 10 easy ways millennials can maximize refunds and avoid costly mistakes

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By now, you've probably heard people talking about tax season — or maybe you got the hint that you'll need to start filing your taxes soon, because of that complicated-looking W-2 form that arrived at your house.

It's only natural to want to procrastinate on filling out those ugly forms (1040-what?) or to feel intimidated or overwhelmed.

Not only do most millennials say they fear filing their taxes — more so than other generations — but young Americans are also scared to make a mistake on their taxes, and are less likely to seek professional guidance.

That might be especially true for you if this year is only your first (or second... or third...) time giving it a try without help from parents.

In fact, you should remember that tax time can be a happy time — especially if you are due for a big refund in the form of a check from the government.

Here are some pointers on what to look out for as you're doing your taxes, so you avoid mistakes and maximize any money due to you. And remember: When in doubt, you can always call the free tax help line that the IRS provides.

1. Know the deadlines — or pay the price

First and foremost, you simply must review a simple list (like this one from Mic) showing when taxes are due. Don't be off, even by a couple of days, or else you run the risk of paying a penalty for filing late.

You might want to circle April 18 on your calendar — as that’s the drop-dead deadline to file your taxes this year. And if you haven’t received your W-2 from your employer by Valentine’s Day, you might want to ring the IRS for help or to file an extension.

Speaking of extensions…

2.Don't make this common mistake regarding extensions

Time waits for no man, and apparently, neither does Uncle Sam.

There might be a reason why you choose to file for a tax extension (hopefully you get it!) that could give you six months of breathing room to get your ducks and tax paperwork in a row.

That, however, does not mean you get to simply shoot an IOU to the government, should you owe them. According to the IRS, "an extension will give you extra time to get your paperwork to the IRS, but it does not extend the time you have to pay any tax due."

"It is a common misconception that if you file for an extension, your obligation to pay your tax bill is also delayed. This is not true!" Jacob Dayan, a partner and co-founder of Community Tax, a tax resolution and debt relief services company, reiterated to Mic. "If you don't pay your tax bill at the deadline you are delinquent, even if you've requested an extension for your return."

3.Beware tax-related identity theft

You might be dreaming about all the awesome things you plan to buy with the tax return you hope to get, and we hope you’re able to enjoy it!

But one common danger all millennials (and everyone, really) needs to look out for is tax-related identity theft. Believe it or not, there are cold-hearted people out there who are looking for opportunities to steal your Social Security number — in order to file a phony tax return and claim your bounty.

In 2016 alone, the IRS discovered thousands of fraudulent refunds and has been working on the double to reduce tax return fraud.

Alex Hamilton, a communications professional at the Identity Theft Resource Center, advises taxpayers to file as early as possible to help reduce the risk of tax-related identity theft. In addition, Hamilton told Mic, it's important to "regularly update your anti-virus software to protect you from a cyber-attack which can steal your personal data."

To prevent tax-related identity theft, the IRS also encourages tax filers to question suspicious emails and "threatening calls" from people posing as representatives of your bank — or even the IRS — and not to carry your Social Security card.

For more tips on how to protect yourself from tax-refund fraud, visit the IRS website.

4.Use student loans — to your advantage

Sadly, it feels like student loan debt is just a universal part of being a millennial.

But there's a silver lining: Millennials contending with student loans have the opportunity to deduct interest paid on student loans.

"Many millennials rush to get their taxes done online as soon as they get their W-2s and don’t wait for their 1098-Es from their student loan providers," Joseph Carpenito, a licensed financial advisor at Raymond James and founder of the financial site MyPlan2Day.com, explained to Mic. "[For] a young person with limited deductions, student loan interest may potentially be one of their largest deductions."

You can deduct up to $2,500 of student loan interest paid in a given year.

There are, however, income limits for this deduction, so be sure to check out tips for claiming the student loan interest deduction on the IRS website.

5.Make the most of small business tax perks if you work a side hustle

Do you love moonlighting as a freelancer or someone who earns extra money doing what you love? Surprise!

The government might actually consider you to be a small business owner.

"Millennials are more involved in the 'gig economy' than other demographics, and many of them like the appeal of working for themselves in jobs like Uber drivers and delivery drivers," Max Robinson, an associate for Jumpstart, a research and experimentation tax credit specialist company, told Mic.

"However, these millennials need to realize that working in jobs like this classifies them as small business owners. This means they're eligible for certain deductions, like petrol expenses," Robinson added.

TL;DR: You might be owed cash back if you spent money on business expenses, so read up on what might count. Cha-ching!

6.Know what the 1099-MISC is for

As the IRS mentions on their website, you don’t have to have a business in order to report income as self-employed or an independent contractor on your taxes.

“In most cases, if you receive a form 1099-MISC it means you are considered self-employed by the government,” Crystal Stranger, president of the tax firm 1st Tax and author of The Small Business Tax Guide, told Mic.

“Not only does this mean you need to report your income and expenses on a Schedule C and pay self-employment (Social Security & Medicare) taxes on your net income, but also, in a lot of places, you will need to register with the city or state and may owe taxes or at least have a filing requirement on the local level," Stranger said. "Missing the local level filing can have bigger tax and penalty implications than making a mistake on your federal taxes.”

7.Use tax software to save time (and money)

Filing your taxes can be a truly overwhelming experience — especially if it’s your first time. It’s easy to feel stressed and worried you're not qualified to operate in the land of adulthood without a parent or guardian nearby.

But that doesn't mean you can't take care of business yourself.

"This may be your first time doing your own taxes, but you don’t have to take your taxes somewhere and pay hundreds of dollars to have them prepared," TurboTax Certified Public Accountant Lisa Greene-Lewis told Mic. "You most likely are one of the 60 million Americans who has a relatively straightforward tax return, so there is no reason to pay someone to do your taxes. You may even be able to file your federal taxes for free."

Companies like TurboTax, H&R Block, and even the IRS offer free tax-filing services to qualifying taxpayers that will not only make your life a little more hassle free, but also help keep some money in your pocket.

Just remember to make sure to report business expenses and other opportunities for deductions when the software prompts you. Speaking of which...

8.Dig deep for deductions

In a rush to get through your taxes as quickly — and with as few gray hairs — as possible, it becomes easy to skip over deductions that can help lower your tax bill. In fact, there are a number of overlooked tax deductions that some experts consider money left on the table.

“It’s easy to overlook the many ways you stay fabulous by helping others throughout the year,” Richard Lavina, CEO of Taxfyle, a personal and business tax filing app, told Mic.

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The Southbourne Tax Group: Five things early tax filers need to know

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The Southbourne Tax Group: Five things early tax filers need to know

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Tax filing season begins Monday but some early filers face new hurdles, as crackdown on fraud continues.

Opening Day for the IRS is Monday.

That's when the Internal Revenue Service will start accepting electronically filed tax returns. We have until April 18 to file returns but many file earlier in the season, if they're expecting large refunds.

The tax filing deadline this year is Tuesday, April 18, instead of the traditional April 15, because of some quirks of the calendar. April 15 is a Saturday. But the deadline won't be shifted to Monday, April 17, because that is Emancipation Day, which is celebrated in Washington, D.C.

What do tax filers need to know this season?

1. Get an appointment if you want to talk to someone at IRS offices.

Don't expect to drop into an IRS office to get any help this tax season. All offices are appointment-only now.

If you need to visit an IRS Taxpayer Assistance Center in person, you must schedule a time by calling 844-545-5640 for the appointment hotline.

Taxpayers are asked to check IRS.gov for the days and hours of service, as well as the services offered at the location they plan to visit.

2. Beware of a new hurdle if you've used a special Individual Taxpayer Identification Number.

Some tax filers will be unable to file their federal tax returns if they do not update Individual Taxpayer Identification Numbers. Warning: Any ITIN that has not been used in the past three years will no longer work for filing that return.

On top of that, individual tax identification numbers that have middle digits of 78 or 79 also expired this year.

Tax filers in these situations must renew an Individual Taxpayer Identification Number as early as possible because they cannot file a tax return without one.

The super-sized headache? The IRS notes that it can take up to 11 weeks during the peak of the tax season to get that number from the time you send in a renewal application, known as Form W-7, for the IRS to process the application and notify you about your status.

Why the change? A new federal law to combat fraud included the requirement that certain Individual Taxpayer Identification Numbers expired on Jan. 1.

"Anyone filing a tax return with an expired ITIN could experience return processing and refund delay as well as denial of some tax benefits until the ITIN is renewed," the IRS said online in a statement.

These identification numbers often are used by people who have tax-filing or payment obligations under U.S. law but are not eligible for a Social Security number.

3. Some struggling families will face delays for their tax refunds.

The IRS notes that more than nine out of 10 refunds will be issued within less than 21 days, which is good news.

But tax filers who benefit from the Earned Income Tax Credit and the Additional Child Tax Credit should not expect their refunds until possibly the week of Feb. 27, even if they file as soon as this week.

The reason? Congress is cracking down on tax-return related fraud. The Protecting Americans from Tax Hikes Act mandated the IRS delay issuing tax refunds for returns claiming the EITC or the Additional Child Tax Credit until Feb. 15. The move is designed to give the IRS more time to detect fraud and prevent refunds from being issued to ID thieves who file fake tax returns using such credits.

But consumers who depend on the refund cash will face extra delays, given holidays and weekends.

Another thing to note: The IRS online "Where's My Refund" tool will not show an estimated date for many tax returns involving the special credits until after Feb. 15.

"So don't panic in late January and mid-February if you don't see a refund date on 'Where's My Refund.' That's just how the tool will operate given the special circumstances with the EITC and ACTC refunds," said IRS Commissioner John Koskinen in prepared remarks in early January.

4. Look out for high-cost, quick-cash on tax refund advances.

Tax filers might be tempted by refund anticipation loans that proclaim "no fee" will be charged. But Chi Chi Wu, staff attorney for the National Consumer Law Center, warns that in some cases, borrowers could face other higher fees for tax preparation or another product.

Advance loans are being heavily marketed this year by some firms, including H&R Block and Jackson Hewitt, in light of the new delays ahead for tax refunds for those who file those Earned Income Tax Credit and the Additional Child Tax Credit.

Jackson Hewitt is marketing for its Express Refund Advance, a loan of up to $1,300 that has no fees, a 0% annual percentage rate and no credit check. To get the loan, you will have to pay to file your taxes with Jackson Hewitt.

H&R Block began offering a tax-related loan for a limited time beginning Jan. 6. The H&R Block Refund Advance offers loans in the amounts of $500, $750, or $1,250 upfront for 0% interest.

The loan is loaded onto an H&R Block Emerald Prepaid MasterCard.

The amount of the advance will be deducted from tax refunds and reduce the amount that is paid directly to the taxpayer. Both Jackson Hewitt and H&R Block only offer the loans to customers who visit their offices and outlets; it's not available online.

5. Take a close look at that W-2 Form.

Some tax filers are going to discover that they have to deal with a "Form W-2 Verification Code."

About 50 million W-2 forms will include a 16-digit verification code that tax filers or preparers will need to add when prompted by tax software. About 2 million W-2s had such a code during the 2016 filing season.

The IRS anticipates that the verification code ultimately will be used on all W-2 forms in future years.

Again, we're looking at another hurdle to try to corral the crooks and prevent the filing of fake tax returns.

6. Remember, scam artists love tax season.

"We continue to ask the public to be vigilant because the scamming doesn't stop," said Luis D. Garcia, IRS spokesperson in Detroit.

The con artists pretending to be from the IRS might reach out via your e-mail in-box, your mailbox or even knock on your front door, Garcia said.

And the crooks are going after tax preparers, too.

Earlier in January, the IRS warned that cyber criminals were pretending to be tax filers who wanted help filing their returns.

The first e-mail says something like: "I need a preparer to file my taxes."

If the tax preparer responds, a second e-mail is sent that has either an embedded web address or contains a PDF attachment that has an embedded web address.

"The tax professional may think they are downloading a potential client's tax information or accessing a site with the potential client's tax information," the IRS warned.

"In reality, the cyber criminals are collecting the preparer's e-mail address and password and possibly other information."

Oddly enough, I even got one of these phishing e-mails last week. The language was stilted and off-kilter, which can be a warning sign.

It began "Hello, CPA," which I am not.

"I need a careful and experienced high quality accountant, to handle all matters of accounting including tax preparation, IRS problem resolution, and matters expected of a CPAs to handle for Individual and Small Business," the e-mail read.

"I don't need that stereo typically dull, introverted and boring accountants, I believe in the value of partnership in business relationships."

"Find attached is my tax documents."

Love that last line. I'd love to respond: Find this attachment for a way to learn how to diagram sentences and master subject-verb agreements.

But then again, we don't want the scammers to get even better at this game, do we? Best to kill and ignore all such phishing e-mails.

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The Southbourne Tax Group: Tips to maximize your tax refund

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The Southbourne Tax Group: Tips to maximize your tax refund

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The 2017 tax season began this month and local tax accountant, Jennifer Eubanks with Mcneel CPA is offering some tips for people who haven't filed for their refund yet.

"A lot of people that are self-employed don't look at taking the self-employed health insurance," says Eubanks, "With health insurance being so high you can take a deduction."

Another deduction Eubanks says people often miss out is their health savings account where you put money into the account but only use it to foot medical bills.

"You also get to take a deduction on your tax return for putting money into a health savings account," says Eubanks. "It's kind of like a retirement account except it is for medical expenses."

Meaning just like a 401k, the more you put in the less taxable income you have, increasing your refund.

Another tip is for parents that have kids in college, American opportunity tax credit is available.

"Anything that relates to school like books, tuition," says Eubanks. "Any kind of qualifying expenses for that, they can take that deduction so they need keep up with all the expenses they have while they're in school."

Eubanks says the IRS is cracking down on fraud this year delaying the release of earned income credit and additional child tax credit until mid Feb.

"Claiming children that are not supposed to be on their tax return so the IRS is looking into more of those earned income credit trying to eliminate a lot of fraud," says Eubanks.

When filing your taxes Eubanks says to keep all your receipts and expenses organized to make the filing process easier.

Employers have until Jan. 31 to send W-2 forms and tax returns have to be filed by April 18.

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The Southbourne Tax Group - Tips to maximize your tax refund

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The Southbourne Tax Group: 3 Tips to Avoid Charity Tax Deduction Scams

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The Southbourne Tax Group: 3 Tips to Avoid Charity Tax Deduction Scams

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Groups and individuals pretending to be charitable organizations are especially active around tax season, as they try to attract donations from Americans looking for a tax deduction. Unfortunately, its one of the “Dirty Dozen” Tax Scams for the 2017 filing season, according to the IRS.

"Fake charities set up by scam artists to steal your money or personal information are a recurring problem," said IRS Commissioner John Koskinen. "Taxpayers should take the time to research organizations before giving their hard-earned money.”

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire someone to prepare their taxes.

Perpetrators of illegal scams can face significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

The IRS offers these basic tips to taxpayers making charitable donations:

1. Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities will provide their Employer Identification Numbers (EIN), if requested, which can be used to verify their legitimacy through EO Select Check. It is advisable to double check using a charity's EIN.

2. Don’t give out personal financial information, such as Social Security numbers or passwords, to anyone who solicits a contribution. Scam artists may use this information to steal identities and money from victims. Donors often use credit cards to make donations. Be cautious when disclosing credit card numbers. Confirm that those soliciting a donation are calling from a legitimate charity.

3. Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

Impersonation of Charitable Organizations

Another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters.

Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.

Fraudsters may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims.

To help disaster victims, the IRS encourages taxpayers to donate to recognized charities. Disaster victims can call the IRS toll-free disaster assistance telephone number (866-562-5227). Phone assistors will answer questions about tax relief or disaster-related tax issues.

Find legitimate and qualified charities with the Select Check search tool on IRS.gov. (EINs are frequently called federal tax identification numbers, which is the same as an EIN).

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The Southbourne Tax Group - 3 Tips to Avoid Charity Tax Deduction Scams

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The Southbourne Tax Group: Six Strategies For Fraud Prevention In Your Business

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The Southbourne Tax Group: Six Strategies For Fraud Prevention In Your Business

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Employee fraud is a significant problem faced by organizations of all types, sizes, locations and industries. While we would all like to believe our employees are loyal and working for the benefit of the organization (and most of them probably are), there are still many reasons why your employees may commit fraud and several ways in which they might do it. According to the 2014 Report to the Nation on Occupational Fraud and Abuse (copyright 2014 by the Association of Certified Fraud Examiners, Inc.), research shows that the typical organization loses 5% of its annual revenue each year due to employee fraud. Prevention and detection are crucial to reducing this loss. Every organization should have a plan in place as preventing fraud is much easier than recovering your losses after a fraud has been committed.

Types of Fraud

Fraud comes in many forms but can be broken down into three categories: asset misappropriation, corruption and financial statement fraud. Asset misappropriation, although least costly, made up 90% of all fraud cases studied. These are schemes in which an employee steals or exploits its organization’s resources. Examples of asset misappropriation are stealing cash before or after it’s been recorded, making a fictitious expense reimbursement claim and/or stealing non-cash assets of the organization.

Financial statement fraud comprised less than five percent of cases but caused the most median loss. These are schemes that involve omitting or intentionally misstating information in the company’s financial reports. This can be in the form of fictitious revenues, hidden liabilities or inflated assets.

Corruption fell in the middle and made up less than one-third of cases. Corruption schemes happen when employees use their influence in business transactions for their own benefit while violating their duty to the employer. Examples of corruption are bribery, extortion and conflict of interest.

Fraud Prevention

It is vital to an organization, large or small, to have a fraud prevention plan in place. The fraud cases studied in the ACFE 2014 Report revealed that the fraudulent activities studied lasted an average of 18 months before being detected. Imagine the type of loss your company could suffer with an employee committing fraud for a year and a half. Luckily, there are ways you can minimize fraud occurrences by implementing different procedures and controls.

1. Know Your Employees

Fraud perpetrators often display behavioral traits that can indicate the intention to commit fraud. Observing and listening to employees can help you identify potential fraud risk. It is important for management to be involved with their employees and take time to get to know them. Often, an attitude change can clue you in to a risk. This can also reveal internal issues that need to be addressed. For example, if an employee feels a lack of appreciation from the business owner or anger at their boss, this could lead him or her to commit fraud as a way of revenge. Any attitude change should cause you to pay close attention to that employee. This may not only minimize a loss from fraud, but can make the organization a better, more efficient place with happier employees. Listening to employees may also reveal other clues. Consider an employee who has worked for your company for 15 years that is now working 65 hours a week instead of 40 because two co-workers were laid off. A discussion with the employee reveals that in addition to his new, heavier workload, his brother lost his job and his family has moved into the employee’s house. This could be a signal of a potential fraud risk. Very often and unfortunately, it’s the employee you least expect that commits the crime. It is imperative to know your employees and engage them in conversation.

2. Make Employees Aware/Set Up Reporting System

Awareness affects all employees. Everyone within the organization should be aware of the fraud risk policy including types of fraud and the consequences associated with them. Those who are planning to commit fraud will know that management is watching and will hopefully be deterred by this. Honest employees who are not tempted to commit fraud will also be made aware of possible signs of fraud or theft. These employees are assets in the fight against fraud. According to the ACFE 2014 Report, most occupational fraud (over 40%) is detected because of a tip. While most tips come from employees of the organization, other important sources of tips are customers, vendors, competitors and acquaintances of the fraudster. Since many employees are hesitant to report incidents to their employers, consider setting up an anonymous reporting system. Employees can report fraudulent activity through a website keeping their identity safe or by using a tip hotline.

3. Implement Internal Controls

Internal controls are the plans and/or programs implemented to safeguard your company’s assets, ensure the integrity of its accounting records, and deter and detect fraud and theft. Segregation of duties is an important component of internal control that can reduce the risk of fraud from occurring. For example, a retail store has one cash register employee, one salesperson, and one manager. The cash and check register receipts should be tallied by one employee while another prepares the deposit slip and the third brings the deposit to the bank. This can help reveal any discrepancies in the collections.

Documentation is another internal control that can help reduce fraud. Consider the example above; if sales receipts and preparation of the bank deposit are documented in the books, the business owner can look at the documentation daily or weekly to verify that the receipts were deposited into the bank. In addition, make sure all checks, purchase orders and invoices are numbered consecutively. Use “for deposit only” stamps on all incoming checks, require two signatures on checks above a specified dollar amount and avoid using a signature stamp. Also, be alert to new vendors as billing-scheme embezzlers setup and make payments to fictitious vendors, usually mailed to a P.O. Box.

Internal control programs should be monitored and revised on a consistent basis to ensure they are effective and current with technological and other advances. If you do not have an internal control process or fraud prevention program in place, then you should hire a professional with experience in this area. An expert will analyze the company’s policies and procedures, recommend appropriate programs and assist with implementation.

4. Monitor Vacation Balances

You might be impressed by the employees who haven’t missed a day of work in years. While these may sound like loyal employees, it could be a sign that these employees have something to hide and are worried that someone will detect their fraud if they were out of the office for a period of time. It is also a good idea to rotate employees to various jobs within a company. This may also reveal fraudulent activity as it allows a second employee to review the activities of the first.

5. Hire Experts

Certified Fraud Examiners (CFE), Certified Public Accountants (CPA) and CPAs who are Certified in Financial Forensics (CFF) can help you in establishing antifraud policies and procedures. These professionals can provide a wide range of services from complete internal control audits and forensic analysis to general and basic consultations.

6. Live the Corporate Culture

A positive work environment can prevent employee fraud and theft. There should be a clear organizational structure, written policies and procedures and fair employment practices. An open-door policy can also provide a great fraud prevention system as it gives employees open lines of communication with management. Business owners and senior management should lead by example and hold every employee accountable for their actions, regardless of position.

Fraud Detection

In addition to prevention strategies, you should also have detection methods in place and make them visible to the employees. According to Managing the Business Risk of Fraud: A Practical Guide, published by Association of Certified Fraud Examiners (ACFE), the visibility of these controls acts as one of the best deterrents to fraudulent behavior. It is important to continuously monitor and update your fraud detection strategies to ensure they are effective. Detection plans usually occur during the regularly scheduled business day. These plans take external information into consideration to link with internal data. The results of your fraud detection plans should enhance your prevention controls. It is important to document your fraud detection strategies including the individuals or teams responsible for each task. Once the final fraud detection plan has been finalized, all employees should be made aware of the plan and how it will be implemented. Communicating this to employees is a prevention method in itself. Knowing the company is watching and will take disciplinary action can hinder employees’ plans to commit fraud.

Conclusion

Those who are willing to commit fraud do not discriminate. It can happen in large or small companies across various industries and geographic locations. Occupational fraud can result in huge financial loss, legal costs, and ruined reputations that can ultimately lead to the downfall of an organization. Having the proper plans in place can significantly reduce fraudulent activities from occurring or cut losses if a fraud already occurred. Making the company policy known to employees is one of the best ways to deter fraudulent behavior. Following through with the policy and enforcing the noted steps and consequences when someone is caught is crucial to preventing fraud. The cost of trying to prevent fraud is less expensive to a business than the cost of the fraud that gets committed.

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The Southbourne Tax Group: Detecting Financial Statement Fraud

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The Southbourne Tax Group: Detecting Financial Statement Fraud

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Looking back at Enron, perhaps the company best known for committing accounting fraud, you can see the many methods that were utilized in order to fraudulently improve the appearance of its financial statements. Through the use of off balance sheet special purpose vehicles the firm continued to hide its liabilities and inflate its earnings. In 1999, limited partnerships were created for the purpose of purchasing Enron shares as a mean of improving performance of its stock. That year, the company returned 56% to its shareholders, which was followed by another 87% appreciation at the onset of the new millennium. As Enron's aggressive accounting practices and financial statement manipulation began to spiral out of control, the scandal was eventually uncovered by the Wall Street Journal. Shortly after, on December 2, 2001 Enron filed for Chapter 11 in what was the largest U.S. bankruptcy in history … only to be surpassed by WorldCom less than a year later.

Complex accounting fraud such as that practiced at Enron is usually extremely difficult for the average retail investor to discover. However, there are some basic red flags that help during the preliminary stages of the investigation. After all, the Enron fraud was not exposed by high paid Ivy League MBA holding Wall Street analysts, but by news reporters who used journal articles and public filings in their due diligence process. Despite passage of Sarbanes-Oxley, financial statement fraud remains too common an occurrence, often damaging people's retirement and educational savings. Being first on the scene to uncover a fraudulent company can be very lucrative from a short seller's perspective and can be rather beneficial to a skeptical investor who is weighing in the overall market sentiment. (After the infamous collapse of companies like Tyco, Enron and WorldCom, the government responded to try and prevent it from happening again.

What Is Financial Statement Fraud?

According to a study conducted by the Association of Certified Fraud Examiners (ACFE), fraudulent financial statement accounts for approximately 10% of incidents concerning white collar crime. Asset misappropriation and corruption tend to occur at a much greater frequency, yet the financial impact of these latter crimes is much less severe. ACFE defines fraud as "deception or misrepresentation that an individual or entity makes knowing that the misrepresentation could result in some unauthorized benefit to the individual or to the entity or some other party." Greed and work pressure are the most common factors pushing management to deceive investors and creditors.

Financial statement fraud can surface in many different forms, although once deceptive accounting practices are initiated, various systems of manipulation will be utilized to maintain the appearance of sustainability. Common approaches to artificially improving the appearance of the financials include: overstating revenues by recording future expected sales, understating expenses through such means as capitalizing operating expenses, inflating assets' net worth by knowingly failing to apply an appropriate depreciation schedule, hiding obligations off of the company's balance sheet and incorrect disclosure of related party transactions and structured finance deals. Another alternative to financial statement fraud involves cookie-jar accounting practices, a procedure by which a firm will understate revenues in one accounting period and maintain them as a reserve for future periods with worse performance. Such procedures remove the appearance of volatility from the operations.

Financial Statement Fraud Red Flags

Financial statement red flags provide a general overview of the warning signs investors should take note of. They do not necessarily indicate an undoubted occurrence of financial statement fraud, but merely signal that further in-depth research must be conducted to assess the validity of the corporate documents. Creditors would find such information useful to ensure that loans are not provided to firms operating with an elevated amount of risk. Investors, on the other hand, may want to take note of the following factors to discover new shorting opportunities. Government regulators, however, aim to catch and punish fraud to ensure the transparency and reliability of the financial markets.

Five basic types of financial statement fraud exist:

·         fictitious sales

·         improper expense recognition

·         incorrect asset valuation

·         hidden liabilities and

·         unsuitable disclosures

Effectively spotting these fraudulent disclosures involves keeping an open eye for the most common financial statement fraud red flags:

·         Accounting anomalies, such as growing revenues without a corresponding growth in cash flows. Sales are much easier to manipulate than cash flow but the two should move more or less in tandem over time.

·         Consistent sales growth while established competitors are experiencing periods of weak performance. Note that this may be due to efficient business operations rather than fraudulent activity.

·         A rapid and unexplainable rise in the number of day's sales in receivables in addition to growing inventories. This suggests obsolete goods for which the firm records fictitious future sales.

·         A significant surge in the company's performance within the final reporting period of fiscal year. The company may be under immense pressure to meet analysts' expectations.

·         The company maintains consistent gross profit margins while its industry is facing pricing pressure. This can potentially indicate failure to recognize expenses or aggressive revenue recognition.

·         A large buildup of fixed assets. An unexpected accumulation of fixed assets can flag the usage of operating expense capitalization, rather than expense recognition.

·         Depreciation methods and estimates of assets' useful life that do not correspond to the overall industry. An overstated life of an asset will decrease the annual depreciation expense.

·         A weak system of internal control. Strong corporate governance and internal controls processes minimize the likelihood that financial statement fraud will go unnoticed.

·         Outsized frequency of complex related-party or third-party transactions, many of which do not add tangible value (can be used to conceal debt off the balance sheet).

·         The firm is on the brink of breaching their debt covenants. To avoid technical default, management may be forced to fraudulently adjust its leverage ratios.

·         The auditor was replaced, resulting in a missed accounting period. Auditor replacement can signal a dysfunctional relationship while missed accounting period provides extra time to "fix" financials.

·         A disproportionate amount of managements' compensation is derived from bonuses based on short term targets. This provides incentive to commit fraud.

·         Something just feels off about the corporation's business model, financial statements or operations

Financial Statement Fraud Detection Methods

Spotting red flags can be extremely challenging as firms that are engaged in fraudulent activities will attempt to portray the image of financial stability and normal business operations. Vertical and horizontal financial statement analysis introduces a straightforward approach to fraud detection. Vertical analysis involves taking every item in the income statement as a percentage of revenue and comparing the year-over-year trends that could be a potential flag cause of concern. A similar approach can also be applied to the balance sheet, using total assets as the comparison benchmark, to monitor significant deviations from normal activity. Horizontal analysis implements a similar approach whereby rather than having an account serve as the point of reference, financial information is represented as a percentage of the base years' figures. Likewise, unexplainable variations in percentages can serve as a red flag requiring further analysis.

Comparative ratio analysis also allows analysts and auditors to spot discrepancies within the firm's financial statements. By analyzing ratios, information regarding day's sales in receivables, leverage multiples and other vital metrics can be determined and analyzed for inconsistencies. A mathematical approach, known as the Beneish Model, evaluates eight ratios to determine the likelihood of earnings manipulation. Asset quality, depreciation, gross margin, leverage and other variables are factored into the analysis. Combining the variables into the model, an M-score is calculated; a value greater than -2.22 warrants further investigation as the firm may be manipulating its earnings while an M-score less than -2.22 suggests that the company is not a manipulator Similar to most other ratio-related strategies, the full picture can only be accurately portrayed once the multiples are compared to the industry and to the specific firm's historical average. (Learn why this ratio may be a good alternative to the current, cash and quick ratios.

The Bottom Line

In the spring of 2000 financial fraud investigator Harry Markopolos approached the SEC, claiming that the wealth management business of Bernard Madoff was fraudulent. After modeling Madoff's portfolio, Markopolos realized that the consistent returns achieved by Madoff were impossible. For example, according to an interview with the Certified Fraud Investigator, he "concluded that for Madoff to execute the trading strategy he said he was using he would have had to buy more options on the Chicago Board Options Exchange than actually existed." Although, Markopolos' warnings went unnoticed, in 2009 Madoff was charged with operating a $65 billion Ponzi scheme.

Instances such as this are rare since fraudulent behavior is often caught before it has a chance to escalate to such levels. Having proper knowledge of the red flags to avoid companies indulging in unscrupulous accounting practices is a useful tool to ensure the safety of your investments.

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The Southbourne Tax Group: 10 Ways to Identify Accounts Payable Fraud

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The Southbourne Tax Group: 10 Ways to Identify Accounts Payable Fraud

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When Sarbanes-Oxley was passed in 2002, many companies were forced to take an in-depth look at internal Accounts Payable controls. Implementing internal controls takes time, but may prove to be a very cost-effective measure if any fraud or leakages are found. Here are a few approaches you can try to tighten up your A/P audit. They require some degree of data mining and programming capability but are fairly straightforward to implement.

1) Duplicate Payments

Duplicate payments in most cases may not be fraud-related, but continue to be a significant A/P leakage that is both preventable and recoverable. Mark Van Holsbeck, Director of Enterprise Network Security for Avery-Dennison, estimates that corporations make duplicate payments at the rate of 2%. Two percent may not sound like much, but if your company’s A/P invoices total $75 million, duplicate payments may account for $1.5 million. Take a look at the statistics:

Medicare - The Dept of Health & Human Services’ Inspector General estimated that Medicare made $89 million of duplicate payments in 1998.

Cingular - We have once again discovered that payments made online as an Electronic funds payment for TDMA accounts, have been deducted twice from the customer's checking account.

Medicaid - We identified at least $9.7 million in such duplicate payments during our two-year audit period, and estimated that as much as $31.1 million in additional duplicate payments may have been made.”

In a rush to find the overpayments, many companies have emerged: A/P Recap, Automated Auditors, AP Recovery, ACL, Cost Recovery Solutions, and more. That these companies are thriving is a testament to the fact that duplicate payments still occur at an alarming rate.

Many software packages have some controls over duplicate invoices but it usually takes some in-depth querying to find them all. For example, many accounting packages do a duplicate invoice check and prevent you from keying in a duplicate invoice number for the same vendor. But just add an “A” to the invoice number or change a penny and you are on your way to a duplicate payment. Another common mistake is found in vendor files; duplicate vendor numbers for the same vendor is the number one cause of duplicate payments.

A programmer in your IT department will be able to help you with the SQL code for these joins.  The SQL code will look something like this to create the first report “EEEE”:

CREATE TABLE DUPES_EEEE AS

SELECT A.*

FROM   INVOICES A, INVOICES B

WHERE  A.VENDORID=B.VENDORID AND

A.INVOICENUM=B.INVOICENUM AND

A.INVOICEDATE=B.INVOICEDATE AND

A.INVOICEAMT=B.INVOICEAMT AND

A.ID <> B.ID

The ID field should be a unique record identifier to distinguish one record from another.  In Microsoft Access, these fields are usually created by using the data type “AutoNumber”.  In open code, a field such as this can be easily created using a counter and incrementing it by 1 for every record (COUNTER = COUNTER + 1).

2)Implement some fuzzy-matching

Implementing “similar” fuzzy-matching instead of exact matching is what makes this approach more accurate and powerful than many.  We define “similar” to mean the following:

Invoice numbers are considered similar if they are exact after stripping out any

zeros and any alphabetic characters as well as punctuation characters.

Invoice dates are considered similar if the difference between the dates is less than a designated amount such as 7 days.  For example, if you entered "7" days for the date tolerance, then all invoices with a date different of 7 or less would be considered similar.  We generally set the date tolerance to 21 days to catch duplicate payments made 3 weeks apart; this often eliminates catching legitimate rent payments.

Amounts are considered similar if they meet one of three criteria:

1.      the amounts are 5% +/- the other amount

2.      one amount is exactly twice as much as the other, i.e.  $220.15 and $440.30

3.      the amounts start with the same first 4 digits, i.e. $123.45 and $1,234.55

Try using similar matching on the invoice number, date, and amount fields when you conduct your next duplicate payment audit – your reports will be shorter and more accurate!

2) Benford’s Law

What is it?

Benford's Law (which was first mentioned in 1881 by the astronomer Simon Newcomb) states that if we randomly select a number from a table of physical constants or statistical data, the probability that the first digit will be a "1" is about 0.301, rather than 0.1 as we might expect if all digits were equally likely. In general, the "law" says that the probability of the first digit being a "d" is

Where ln refers to the natural log (base e).  This numerical phenomenon was published by Newcomb in a paper entitled "Note on the Frequency of Use of the Different Digits in Natural Numbers", which appeared in The American Journal of Mathematics (1881) 4, 39-40. It was re-discovered by Benford in 1938, and he published an article called "The Law of Anomalous Numbers" in Proc. Amer. Phil. Soc 78, pp 551-72. [1]

You can actually re-create this function in Excel quite easily.  In one column, type 1, 2, 3, through 9, making 9 rows in cells A1 through A9.  In the second column, cell B1, type the function “=ln(1 + 1/A1) / ln(10)” and copy this function for cells B2 through B9 and it will create the probabilities.

How is it used to identify fraud?

If we know the normal frequency of digits, then we can identify digit frequencies that violate that normal behavior.  For example, Benford concluded that, out of a group of numbers, the first digit will be “1” about 30% of the time.  Similarly, using the same function, we can expect the first digit to be “8” about 5.1% of the time.  Expected frequencies for each first-digit of the invoice amount are shown in the graph below:

If we review Accounts Payable invoices and determine the first digit of the invoices is “8” 50% of the time, then we may have either many legitimate payments that start with “8”; or we may have fictitious invoice amounts.  Fraudsters will often create an amount that starts with a higher number, like 8 or 9, not knowing that auditors are now equipped to identify these abnormal payments.

3) Rounded-Amount Invoices

People who commit fraud often create invoices with rounded amounts, which are invoices without pennies.  Yes, you would think the fraudster would have “cents” enough to do otherwise.  An easy way to identify rounded-amount invoices is to use the MOD function in Excel.  Suppose your invoice amount is $150.17; then MOD(150.17,1) gives you the remainder of dividing 150.17 by 1, which is .17.  So, using the MOD function with a divisor of 1 on a no-pennies amount would leave us a remainder of 0.  Additionally, try to rank your vendors by those with a high percentage of rounded-amount invoices.  To do this, just calculate each vendors’ number of rounded-amount invoices and divide it by the total number of invoices for that vendor, obtaining the percentage.  Then rank by descending percentage to review the most suspicious vendors first.

4) Invoices Just Below Approval Amounts

People who commit fraud are not always the “sharpest knife in the drawer.”  Suppose an A/P clerk knows the different dollar thresholds for management approval.  For example, a supervisor may only be allowed to approve invoices of $3,000 or less, while a manager may be allowed to approve invoices of $10,000 or less, and so on.  Suppose this A/P clerk and a manager decide to skim off some extra dollars together.  What is the easiest way to get the most money?  Create an invoice just below the approval level of that manager:  $9,998 when the approval level is $10,000; or $2,978 when the approval level is $3,000.

To identify these potentially fraudulent invoices, try this:  identify invoices that are 3% (or less) LESS THAN the approval amount.  For example, if your approval amount is $3,000, then any invoice that is between $2,910 and $2,999 would be flagged as suspicious.

5) Check Theft Search

Most Accounts Payable departments conduct a reconciliation of Accounts Payable with the monthly Bank Statement to identify any discrepancies between the two.  This process can also be instrumental in identifying check fraud.  One simple way to spot potential check fraud is to identify missing check numbers or gaps in reconciled checks numbers.  This is usually indicated on the bank statement with a ‘*” or ‘#’ to indicate the check number is not sequential.

Another more advanced way is to conduct a reverse Positive Pay electronically.  By merging your check register, A/P file, and bank statements together, you have the power to identify stolen checks.  Better yet, if your bank has OCR (Optical Character Recognition) abilities, then you can identify the actual payee on the check.

Speaking in technological terms, you have 3 different data bases describing 1 activity.  Use the 3 data sources to find any discrepancies in the 1 payment.  If your check numbers are unique, try merging all 3 data sources by the check number and compare each of the following fields:

-payee

-check amount

-check date

Using SQL code or another programming language, identify all of the checks that are in one data base and not the other.  In addition, identify all of the checks that are in all 3 data sources but have different payee names or different amounts and dates.

6) Abnormal Invoice Volume Activity

Monitoring vendor invoice volume is one way to alert you to abnormal behavior.  Rapid invoice volume increases may indicate a legitimate increase in business, but also may indicate that a fraudster has become more confident in stealing money.  Either way, the increase may warrant further investigation.  Suppose a vendor has 2 invoices one month and 70 the next – you may want to know why even if the reason is not a fraudulent one.

To calculate the percent increase in invoice volume from month to next month, find the difference in number of invoices and then divide by the number of invoices in the first month.  In our example, going from 2 invoices to 70, the difference (68) divided by the number of invoices in the first month (2) represents a 3,400% increase.  Setting the threshold percentage is the key here; when doing audits, we like to set the threshold percentage at 300% or higher.  Setting the threshold at 300% will catch increases from 3 to 13, which may not be interesting, so you may also want to set a minimum number of records that you are interested in, such as 50 as your second month’s number of invoices.  Setting the threshold at 300% will also catch more interesting increases, such as 50 to 220.

7) Vendors with Cancelled or Returned Checks

Cancelled and returned checks do occur in the course of a normal Accounts Payable month.  What is more uncommon is a vendor with many cancelled checks or a regular pattern of cancelled checks.  Cancelled checks are usually legitimate transactions; however, a cancelled check can be returned to the wrong hands and re-written to the fraudster.  Below is a true story of how a clerk turned a returned check into a fraudulent one:

“An uncashed disbursement check was returned to an accounts payable clerk for disposition because she originated the invoice entry. The clerk put the check in her desk and forgot about it for several months. Upon cleaning her desk, she discovered the returned check. When she checked the paid history, she realized the supplier had returned the check when it was determined to be a duplicate payment of an invoice. She also noticed that the payee name had been printed slightly below "Payee" on the check. With a bit of effort she managed to align the check and insert her name above the original payee in a print similar to the original, along with an "or" designation following her name. The fraud was caught by an accounts payable auditor searching for duplicate payments and who was asked by the supplier to furnish proof of duplicate payments by providing copies of both cancelled checks. “

This algorithm is easy to implement.  Calculate the number of cancelled or returned checks for each vendor and divide by the total number of checks for that vendor.  Then, sort this list by descending percent so that your most suspicious vendors are at the top of the report

8) Above Average Payments per Vendor

This algorithm identifies invoices that are way above average for a particular vendor.  Suppose a vendor normally has invoices ranging from $1,000 to $3,000; suddenly an invoice shows up for $25,000.  You may want to investigate this abnormality and can do so using this alert pattern.

This algorithm is also easy to implement:  For each vendor, calculate the average and standard deviation of the invoice amount.  Then, calculate a z-score for each invoice amount

z-score  = (invoice amount – average amount) / standard deviation

Then, flag all vendors with a z-score above 2.5, indicating the payment is more than 2.5 standard deviations above the mean.  If your report is still too large, try increasing the z-score threshold to 3.0 or higher.

Using this algorithm alone, we were able to catch employee fraud occurring in a mid-size health manufacturing company.  The fraudulent employee was receiving a paycheck every other week in the amount of $500 to $1,000 when, all of the sudden, 3 invoices for $40,000 each appeared.  Because $40,000 was significantly greater than this employee’s average payment, the payments were flagged for further research.  What made the invoices even more suspect was that they occurred on or near the same date and had no invoice number.  After alerting the new controller of the suspect payments, the new controller was aware that an employee had left in a legal “scuffle” but was not aware of the $40,000 checks that were stolen.

9) Vendor / Employee Cross-Check

“Trust but verify”.  Most employees are generally trustworthy!  But it does not hurt to conduct some data mining to make sure they are.  Here is a simple approach to cross-check your vendor and employee files to see if perhaps an employee has set up a fictitious vendor.

Try merging your vendor file and employee file by the following variables:

Address

Tax ID Number

Phone Number

Bank Routing Number

If you have a good programmer, try doing some fuzzy-matching on these fields as well.  For address, try extracting JUST THE NUMBERS in the street plus the zip code, and then compare these numbers.  This eliminates matching on noise words such as “Drive” and “Suite”.

Also, try doing some fuzzy-matching on tax ID number as well, just in case there was a typo in the data entry.  If you specify that the tax IDs are equal if they are even 1 digit off, you may catch a vendor/employee ring!

This algorithm made it possible to detect a real employee (“Kathy”) whose SSN was the same as a company EIN (tax ID number).  The company name, which we will call “ABC Inc”, happened to be on the same street, city, and state as a person with the same last name as the employee (presumably her spouse).  Without this pattern, the employee fraud may have gone undetected.

10) Vendors with a Mail Drop as an Address

This algorithm compares vendor addresses with mail-box drop address such as “Mail Boxes, Etc”.  Some fraudsters will use mail drops as their address instead of a P.O. Box, to hide their fraudulent activity.  Not all of the vendors appearing on this list will be fraudulent, because a vendor may in fact be right next to a Mail Boxes, Etc.  However, the list provides a unique approach to reviewing vendors who also may show up on another alert list.

(To obtain a copy of the mail-drop table, contact the author of this document).  Or, if you have time, you can also search for Mail Boxes, Etc. on www.411.com and put the addresses in a database and then conduct your address matching accordingly.

Summary

Occupational fraud is a growing problem.  In fact, the Association of Certified Fraud Examiners (ACFE) estimates that 5% of all revenue is lost to occupational fraud every year.  Fraud is not 100%preventable but there ARE steps you can take to both prevent and detect fraud on an ongoing basis.  At a minimum, scan for duplicate payments every 6 months, and perform an annual cross-check between your vendor file and employee file.  With these two steps alone, you may be able to pinpoint leakages that otherwise may go unnoticed.

About the Author

Christine L. Warner is the President of Automated Auditors, LLC, and has over 20 years of experience in data mining, fraud detection, statistical analysis, and complex customized programming. She has authored several articles on using data mining to detect fraud, such as "Death Fraud: This Identity Theft is Alive and Kicking", co-authored with Cheryl Hyder, for which they received the Hubbard award in 2011 for most influential article published in Fraud Magazine (ACFE). Christine has served as the Deputy Project Director of a Medicaid Integrity Contractor audit for the entire Northeast region of the U.S., and has personally developed over 50 healthcare fraud algorithms, as well as an entire suite of Accounts Payable fraud algorithms.

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The Southbourne Tax Group: Accounting For Half-Truths

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The Southbourne Tax Group: Accounting For Half-Truths

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A report by a brokerage on Satyam Computers gives an 'accumulate' rating, which means it expects the stock to go up. The rating is based on the company's high cash/market cap ratio. The information technology company had reported a cash balance of Rs 4,500 crore at the end of the 2007-08 financial year. The report gives a one-year price target of Rs 373 for the stock. The stock closes at Rs 273 the day the report is written.

January 2009: The same brokerage releases a hurriedly-compiled report suspending the previous rating. "Low market cap, high cash status no longer holds," it says. On 7 January 2009, the founder of Satyam Computers admits to inflating cash and bank balances by Rs 5,040 crore, overstating debtors' position (money lent) of Rs 2,650 crore as against the actual figure of Rs 490 crore and non-disclosure or understatement of liabilities worth Rs 1,230 crore.

The Satyam accounting scam, one of the biggest in India, left millions of investors in the lurch, as the stock fell from Rs 179 to Rs 23 in one trading session.

The inability of stock analysts to identify the 'gaps' in Satyam's books and ring warning bells proved costly for investors. Had investors known the basics of reading financial statements and techniques used by companies to report false numbers, they would have asked their advisors a few valid questions about Satyam's finances.

Some would argue how lay investors could see red flags when experts failed to do so. It's a valid argument, though we believe that with a little bit of learning you can see what professionals cannot.

We discuss a few common forms of accounting frauds companies indulge in and signs that may alert you to wrongdoing -

FINANCIAL REPORTS

A company's financial health can be gauged through three statements - balance sheet, profit and loss account and cash flow accounts.

A balance sheet records a company's assets (land, machinery, inventory, cash balance, investments, loans given), liabilities (loans taken, income tax payable, tax liabilities) and owner's equity. It is generally prepared annually.

A profit and loss statement (or income statement) records a company's earnings and expenses. Any company whose shares are traded on exchanges is required to release its income statement every quarter.

A cash flow statement tells us where cash is coming from (inflow) and how it is being used (outflow). There are three types of cash flow-operating cash flow (sale of goods, revenue from services, interest/dividend received, payment for purchases, payment for operating expenses), investing cash flow (sale and purchase of assets, sale and purchase of debt/equity, loans advanced to others) and financial cash flow (issue of equity shares, borrowing, repayment of debt).

Notes to accounts are important as they detail the accounting policies followed, pension and other post-employment benefits and potential liabilities/losses.

MANIPULATION OF STATEMENTS

There are many items in financial statements for which companies use different policies. These are inventory valuation, investments and fixed assets, conversion of foreign currency and asset depreciation.

Companies often manipulate these to inflate revenue, assets, cash inflow and understate expense, liabilities and cash outflow in financial statements.

INFLATING EARNINGS

1) Lending to customers: Sometimes companies lend money to customers to buy their goods. This way they can report high revenue in the income statement and high receivables (treated as an asset) in the balance sheet.

2) Trade stuffing: Companies use this usually just before the end of a reporting period. They ship goods to customers even though the latter may not need them immediately. This increases sales ahead of the reporting period.

3) Understating provisions: Companies often allow credit sales on generous terms, sometimes even to customers with a poor credit history. Ideally, in such sales, the company should set aside a higher amount for bad debt provisioning. This amount is recorded as a liability. Understating such liabilities is another way of 'enhancing' the financial statement.

4) Round-tripping: This means getting into fictitious transactions with related parties to inflate revenue. In round-tripping, a company sells unused assets to a party with the promise of buying back at a later date at the same price.

UNDERSTATING EXPENSES

1) Spreading out expenses: According to accounting norms, if an expense has been made for acquiring an asset whose benefits the company will avail of over a long term, the expense is to be reported in the books in a spread-out manner over that period. The process is called capitalising. Companies often use this to delay recognition of short-term expenses.

2) Cookie jar accounting: Companies put aside money for possible loan defaults. Some companies, during periods of high revenue growth, increase the amount and release the same during periods of poor revenue, offsetting the impact of low sales growth. Among other common forms of financial statement manipulation are revaluation of assets, showing unrealised gains as profits and assigning higher values to fixed assets.

3) Off-balance sheet items: Some assets/liabilities or financing activities are not fully recognised in the balance sheet due to the complexity of transactions involved. These include pension assets and liabilities, assets and liabilities of joint ventures and unconsolidated subsidiaries and lease arrangements. These are recorded in footnotes of financial statements.

Many companies resort to off-balance sheet financing by way of entering into joint ventures, research and development partnerships and lease contracts. Floating special purpose entities or subsidiaries to expand business is another off-balance sheet arrangement.

As the liabilities/risk involved in such transactions are not reflected in the balance sheet, one may draw wrong conclusions about a company's financial health. It is, therefore, necessary to check the footnotes of financial statements.

RED FLAGS

Some manipulations we mentioned earlier are difficult to detect even for finance professionals. Here are some indicators of rot in a company's financial books.

Continuous high level of cash, cash equivalents and current assets: Satyam Computers showed high cash balance over the years. Later it turned out it had inflated cash and bank balances by as much as Rs 5,040 crore.

Reported earnings consistently higher than cash flow: If cash flow from operating activities of a company is consistently less than the reported net income, it is a warning sign. The investor must ask why operating earnings are not turning into cash.

Sudden increase in inventory/sales ratio: This indicates the company may be inflating assets such as inventories.

Spurt in other income: Revenue sources recorded under other income are non-recurring and may include earnings from asset sales and closure of debt or debt restructuring. However, sources of earnings are seldom disclosed under this head. A sudden spurt should raise eyebrows.

Frequent changes in policies: Earnings and assets can be inflated by alternative accounting policies. If one sees frequent changes in these policies, there may be something fishy about the company's books.

Financial ratios not in line with industry peers: This could be due to inflated earnings, asset valuation or understating of expenses and liabilities.

Too many off-balance sheet transactions: If a company has been expanding by creating special purpose entities and has entered into many lease contracts, it is possible a lot of liabilities are not reflected in its balance sheet.

We have seen in the past that many respected and renowned companies have been charged with manipulation of account books. Therefore, investors must stop treating financial statements issued by companies as gospel truth and scan them carefully to detect possible foul plays.

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The Southbourne Tax Group: 10 Essential Tips for Preventing Corporate Fraud

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The Southbourne Tax Group: 10 Essential Tips for Preventing Corporate Fraud

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Small businesses are often targets of fraud. According to the American Institute of Certified Public Accountants (AICPA), small and midsize companies suffer a greater share of fraud losses than do larger companies.

Fraud Prevention Program

Experts estimate that companies lose five to six per cent of their annual revenue to fraud, so a comprehensive fraud prevention program is essential. This consists of three things:

• education

• investigation

• proactive prevention

Employees are the most likely to report misdeeds, so you want to give them the knowledge to help the company as an integral part of your fraud prevention program. And while fraud prevention efforts are designed to stop employee fraud, investigations of suspected fraud should deter other employees from committing fraud.

The bulk of your company’s fraud prevention efforts should be focused on the creation and implementation of proactive preventive techniques, including internal controls, policies, and procedures that are specifically designed to prevent fraud.

10 Ways to Prevent Fraud

One of the best ways to develop policies and procedures that are effective in prevention corporate fraud is with the assistance of an experienced anti-fraud professional who has investigated hundreds of frauds to develop the most relevant and most effective anti-fraud controls including:

• Establish clear and easy to understand standards from the top down. Have an employee manual that clearly outlines these standards and keeps the rules from becoming arbitrary.

• Always check references and perform background checks that include employment, credit, licensing and criminal history for all new hires.

• Secure physical assets, access to data, and money at all levels including monitoring and using pre-numbered checks, keep checks locked up, have a “voided check” procedure and never sign blank checks. Review all disbursements regularly.

• Segregation of duties of employees. Divide activities so one employee doesn’t have too much control over an area or duty. Separate important accounting and account payable functions. Small-business owners and managers should review every payroll check personally. The person who has custody of the checks should never have check signing authority. The person opening the mail should not record the receivables and reconcile the accounts.

• Proper authorization of transactions, ensuring that employees aren’t exceeding their authority.

• Independent checks on performance, using audits, surprise check-ups, inventory counts, or other procedures to verify compliance with policies and procedures, as well as accuracy.

• Instill an anonymous reporting mechanism, such as an employee fraud hotline.

• Small-business owners should control who first receives the bank statements and other sensitive documents. Consider a separate post office box for the purpose of receiving bank statements, customer receipts or any other sensitive documents.

• All account reconciliations and general ledger balances should have an independent review by a person outside the responsibility area such as an outside accountant. This allows for reviews, better ensuring nothing is amiss and providing a deterrent for fraudulent activities.

• Conduct annual audits to motivate all bookkeeping-related staff to keep things honest because they can never be sure what questions an auditor is going to ask or what documents an auditor may request to review.

While no company, even with the strongest internal controls, is completely protected from fraud, strengthening internal control policies, processes and procedures will go a long way towards making your company a less attractive target to both internal and external criminals.

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The Southbourne Tax Group - 10 Essential Tips for Preventing Corporate Fraud

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The Southbourne Tax Group: 20 Ways You Can Detect Fraud

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The Southbourne Tax Group: 20 Ways You Can Detect Fraud

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Here is a list of items to help you detect fraud in your company or a client's company.

1. Unusual Behavior

The perpetrator will often display unusual behavior, that when taken as a whole is a strong indicator of fraud. The fraudster may not ever take a vacation or call in sick in fear of being caught. He or she may not assign out work even when overloaded. Other symptoms may be changes in behavior such as increased drinking, smoking, defensiveness, and unusual irritability and suspiciousness.

2. Complaints

Frequently tips or complaints will be received which indicate that a fraudulent action is going on. Complaints have been known to be some of the best sources of fraud and should be taken seriously. Although all too often, the motives of the complainant may be suspect, the allegations usually have merit that warrant further investigation.

3. Stale Items in Reconciliations

In bank reconciliations, deposits or checks not included in the reconciliation could be indicative of theft. Missing deposits could mean the perpetrator absconded with the funds; missing checks could indicate one made out to a bogus payee.

4. Excessive Voids

Voided sales slips could mean that the sale was rung up, the payment diverted to the use of the perpetrator, and the sales slip subsequently voided to cover the theft.

5. Missing Documents

Documents which are unable to be located can be a red flag for fraud. Although it is expected that some documents will be misplaced, the auditor should look for explanations as to why the documents are missing, and what steps were taken to locate the requested items. All too often, the auditors will select an alternate item or allow the auditee to select an alternate without determining whether or not a problem exists.

6. Excessive Credit Memos

Similar to excessive voids, this technique can be used to cover the theft of cash. A credit memo to a phony customer is written out, and the cash is taken to make total cash balance.

7. Common Names and Addresses for Refunds

Sales employees frequently make bogus refunds to customers for merchandise. The address shown for the refund is then made to the employee's address, or to the address of a friend or co-worker.

8. Increasing Reconciling Items

Stolen deposits, or bogus checks written, are frequently not removed, or covered, from the reconciliation. Hence, over a period of time, the reconciling items tend to increase.

9. General Ledger Out-of-Balance

When funds, merchandise, or assets are stolen and not covered by a fictitious entry, the general ledger will be out of balance. An inventory of the merchandise or cash is needed to confirm the existence of the missing assets.

10. Adjustments to Receivables or Payables

In cases where customer payments are misappropriated, adjustments to receivables can be made to cover the shortage. Where payables are adjusted, the perpetrator can use a phony billing scheme to convert cash to his or her own use.

11. Excess Purchases

Excess purchases can be used to cover fraud in two ways:

Fictitious payees are used to convert funds.

Excessive purchases may indicate a possible payoff of purchasing agent.

12. Duplicate Payments

Duplicate payments are sometimes converted to the use of an employee. The employee may notice the duplicate payment, then he or she may prepare a phony endorsement of the check.

13. Ghost Employees

Ghost employee schemes are frequently uncovered when an auditor, fraud examiner, or other individual distributes paychecks to employees. Missing or otherwise unaccounted for employees could indicate the existence of a ghost employee scheme.

14. Employee Expense Accounts

Employees frequently conceal fraud in their individual expense account reimbursements. These reimbursements should be scrutinized for reasonableness and trends, especially in the area of cash transactions on the expense account.

15. Inventory Shortages

Normal shrinkage over a period of time can be computed through historical analysis. Excessive shrinkage could explain a host of fraudulent activity, from embezzlement to theft of inventory.

16. Increased Scrap

In the manufacturing process, an increased amount of scrap could indicate a scheme to steal and resell this material. Scrap is a favorite target of embezzlers because it is usually subject to less scrutiny than regular inventory.

17. Large Payments to Individuals

Excessively large payments to individuals may indicate instances of fraudulent disbursements.

18. Employee Overtime

Employees being paid for overtime hours not worked by altering time sheets before or after management approval.

19. Write-off of Accounts Receivable

Comparing the write-off of receivables by customers may lead to information indicating that the employee has absconded with customer payments.

20. Post Office Boxes as Shipping Addresses

In instances where merchandise is shipped to a post office box, this may indicate that an employee is shipping to a bogus purchaser.

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The Southbourne Tax Group: Fraud prevention tips for your small business clients

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The Southbourne Tax Group: Fraud prevention tips for your small business clients

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Your clients rely on you for sound business advice. And sometimes the best advice is hard to give. In the case of fraud, you’ll need to tell your small business clients some uncomfortable truths.

Your clients probably underestimate the risk of fraud

According to the world's largest anti-fraud organisation, the Association of Certified Fraud Examiners (ACFE), small and mid-sized businesses are the most common victims of organisational fraud. And the effects can be more damaging.

Small businesses report 31.8 percent of all instances of fraud – a higher rate than for larger businesses – and suffer greater losses in relation to their size. And more than half of all small businesses that suffer fraud don’t recover any losses.

The types of fraud that your clients need to be aware of fall into three categories:

·         theft

·         financial statement fraud

·         asset misuse

ACFE says theft is the most common, including:

·         stealing cash

·         claiming fake expenses

·         taking property

Employees are the main culprits, which can be tough for your small business clients to swallow. They often consider their employees as friends or members of an extended family.

What makes a business vulnerable to fraud?

There are many conditions that allow fraud to take hold:

·         Employees perform multiple functions, allowing them to hide their actions.

·         Staff become too familiar and trusting with each other.

·         The absence of formal procedure means things don’t get recorded.

·         Staff lack the expertise to recognise fraud.

It’s vital that small businesses take steps to deter fraud and detect it as soon as possible.

When you’re meeting with your small business clients, here are 10 important things to say:

1. “Don’t let one employee do all the accounting and bookkeeping”

Because of their size, many small businesses have one person that always handles bookkeeping functions like:

·         client receivables

·         processing client payments

·         paying invoices

·         managing petty cash

·         recording functions in the accounting system

This makes it easy for cases of fraud to go unnoticed. Businesses should have at least two people handling these functions – with accounting and cash-handling separated. You might also suggest that your firm acts as a virtual CFO to provide extra oversight.

2. “Make sure you know your employees really well”

It might seem like an obvious fraud prevention tip, but you need to stress the importance of credit card security to your clients. They probably know they should be careful, yet they may still mix business and personal accounts when it’s convenient to do so. That can result in costly errors – such as tax fines or penalties.

Separating accounts also makes it easier to record business expenses. Encourage clients to protect credit card information and to use secure, online bill payment services wherever possible.

3. “Maintain robust internal controls and processes”

Small businesses often feel immune to fraud but you should encourage clients to introduce controls. They can detect (and help prevent) fraud by:

·         restricting employee access to financial account data

·         limiting access to inventory or stock

·         establishing multi-person sign-off for:

-          expense claims

-          overtime

-          cheque writing

-          other accounting or payroll functions

·         using audit logs or audit trails to track and trace all financial transactions

4. “Watch your business bank accounts like a hawk”

Of all the fraud prevention tips, this one’s become really easy to implement. Online banking makes it quick and painless for your clients to check account activity whenever they like. It’s worth doing, to make sure that paper-based statements haven’t been manipulated.

The key items to look for are:

·         missing or out-of-order cheques

·         unknown payment recipients

·         payments made to unrecognised businesses or personal accounts

Simply letting staff know that you’re reviewing account activity can help prevent fraud.

5. “Make sure you audit high-risk areas often”

Your clients should routinely audit areas of their business that deal in:

·         cash

·         refunds

·         product returns

·         inventory management

·         accounting and bookkeeping functions

Employees should be told that audits will take place but there shouldn’t be a schedule. By making the audits random, your clients are more likely to dig out fraud.

The ACFE also offers a check-up to assess fraud prevention processes. Even if your client doesn’t have anything in place, this check-up can be a good place to start.

6. “Train your employees to prevent fraud”

It’s really important that employees in fraud-prone areas of small businesses are taught how to:

·         identify fraud

·         prevent fraud

·         report suspicious behavior by coworkers and customers

Help your client educate staff about some of the common warning signs. Set up an anonymous reporting system, too. It’ll make it easier for employees to share information about suspicious activity.

Your clients should create an official code of ethics to demonstrate that fraud won’t be tolerated. This will also help reinforce that fraud is a crime, which is important. People sometimes kid themselves that unethical behaviour is victimless when they’re in a business setting.

7. “Protect your business’s credit card information”

It might seem like an obvious fraud prevention tip, but you need to stress the importance of credit card security to your clients. They probably know they should be careful, yet they may still mix business and personal accounts when it’s convenient to do so. That can result in costly errors – such as tax fines or penalties.

Separating accounts also makes it easier to record business expenses. Encourage clients to protect credit card information and to use secure, online bill payment services wherever possible.

8. “Know who your business partners are”

Your clients should record basic information about the people they do business with. This should include:

·         physical address

·         contact names and phone numbers (at least two)

·         mutual business relationships or references that can be checked

For further peace of mind, your clients should look up the businesses they’re dealing with to check:

·         they’re a legitimate business

·         who the owners are

·         how long they’ve been in business

There are other great sources of background information like the Companies Office.

9. “Check into every case – no matter how small”

These fraud prevention tips only help if clients follow through. They must look into reports or suspicions, no matter how small or unlikely they seem. It’s important not to:

·         become complacent with long-serving staff

·         be distracted by the daily pressures of running a business

The earlier fraud is detected, the better the result for the business and the culprit.

10. “Get expert help if things don’t add up”

If a client follows your fraud prevention tips and the numbers still don’t add up, you may need to get more involved in auditing the business. Or you could refer them to ACFE for help with fraud detection.

Fraud prevention starts with a conversation

Small business owners consistently underestimate the threat of fraud – yet studies show they face the greatest risk. If they feel awkward about introducing fraud prevention measures with trusted staff – you’ll have to play the ‘bad cop’. They can tell their staff it’s all your idea.

As a bonus to your client, many of these strategies – such as dividing responsibilities and getting two sets of eyes on the books – also help with quality control. Encourage them to get started today.

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The Southbourne Tax Group: Six Strategies for Fraud Prevention in your Business

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The Southbourne Tax Group: Six Strategies for Fraud Prevention in your Business

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Employee fraud is a significant problem faced by organizations of all types, sizes, locations and industries. While we would all like to believe our employees are loyal and working for the benefit of the organization (and most of them probably are), there are still many reasons why your employees may commit fraud and several ways in which they might do it. According to the 2014 Report to the Nation on Occupational Fraud and Abuse (copyright 2014 by the Association of Certified Fraud Examiners, Inc.), research shows that the typical organization loses 5% of its annual revenue each year due to employee fraud. Prevention and detection are crucial to reducing this loss. Every organization should have a plan in place as preventing fraud is much easier than recovering your losses after a fraud has been committed.

Types of Fraud

Fraud comes in many forms but can be broken down into three categories: asset misappropriation, corruption and financial statement fraud. Asset misappropriation, although least costly, made up 90% of all fraud cases studied. These are schemes in which an employee steals or exploits its organization’s resources. Examples of asset misappropriation are stealing cash before or after it’s been recorded, making a fictitious expense reimbursement claim and/or stealing non-cash assets of the organization.

Financial statement fraud comprised less than five percent of cases but caused the most median loss. These are schemes that involve omitting or intentionally misstating information in the company’s financial reports. This can be in the form of fictitious revenues, hidden liabilities or inflated assets.

Corruption fell in the middle and made up less than one-third of cases. Corruption schemes happen when employees use their influence in business transactions for their own benefit while violating their duty to the employer. Examples of corruption are bribery, extortion and conflict of interest.

Fraud Prevention

It is vital to an organization, large or small, to have a fraud prevention plan in place. The fraud cases studied in the ACFE 2014 Report revealed that the fraudulent activities studied lasted an average of 18 months before being detected. Imagine the type of loss your company could suffer with an employee committing fraud for a year and a half. Luckily, there are ways you can minimize fraud occurrences by implementing different procedures and controls.

1.Know Your Employees

Fraud perpetrators often display behavioral traits that can indicate the intention to commit fraud. Observing and listening to employees can help you identify potential fraud risk. It is important for management to be involved with their employees and take time to get to know them. Often, an attitude change can clue you in to a risk. This can also reveal internal issues that need to be addressed. For example, if an employee feels a lack of appreciation from the business owner or anger at their boss, this could lead him or her to commit fraud as a way of revenge. Any attitude change should cause you to pay close attention to that employee. This may not only minimize a loss from fraud, but can make the organization a better, more efficient place with happier employees. Listening to employees may also reveal other clues. Consider an employee who has worked for your company for 15 years that is now working 65 hours a week instead of 40 because two co-workers were laid off. A discussion with the employee reveals that in addition to his new, heavier workload, his brother lost his job and his family has moved into the employee’s house. This could be a signal of a potential fraud risk. Very often and unfortunately, it’s the employee you least expect that commits the crime. It is imperative to know your employees and engage them in conversation.

2.Make Employees Aware/Set Up Reporting System

Awareness affects all employees. Everyone within the organization should be aware of the fraud risk policy including types of fraud and the consequences associated with them. Those who are planning to commit fraud will know that management is watching and will hopefully be deterred by this. Honest employees who are not tempted to commit fraud will also be made aware of possible signs of fraud or theft. These employees are assets in the fight against fraud. According to the ACFE 2014 Report, most occupational fraud (over 40%) is detected because of a tip. While most tips come from employees of the organization, other important sources of tips are customers, vendors, competitors and acquaintances of the fraudster. Since many employees are hesitant to report incidents to their employers, consider setting up an anonymous reporting system. Employees can report fraudulent activity through a website keeping their identity safe or by using a tip hotline.

3.Implement Internal Controls

Internal controls are the plans and/or programs implemented to safeguard your company’s assets, ensure the integrity of its accounting records, and deter and detect fraud and theft. Segregation of duties is an important component of internal control that can reduce the risk of fraud from occurring. For example, a retail store has one cash register employee, one salesperson, and one manager. The cash and check register receipts should be tallied by one employee while another prepares the deposit slip and the third brings the deposit to the bank. This can help reveal any discrepancies in the collections.

Documentation is another internal control that can help reduce fraud. Consider the example above; if sales receipts and preparation of the bank deposit are documented in the books, the business owner can look at the documentation daily or weekly to verify that the receipts were deposited into the bank. In addition, make sure all checks, purchase orders and invoices are numbered consecutively. Use “for deposit only” stamps on all incoming checks, require two signatures on checks above a specified dollar amount and avoid using a signature stamp. Also, be alert to new vendors as billing-scheme embezzlers setup and make payments to fictitious vendors, usually mailed to a P.O. Box.

Internal control programs should be monitored and revised on a consistent basis to ensure they are effective and current with technological and other advances. If you do not have an internal control process or fraud prevention program in place, then you should hire a professional with experience in this area. An expert will analyze the company’s policies and procedures, recommend appropriate programs and assist with implementation.

4.Monitor Vacation Balances

You might be impressed by the employees who haven’t missed a day of work in years. While these may sound like loyal employees, it could be a sign that these employees have something to hide and are worried that someone will detect their fraud if they were out of the office for a period of time. It is also a good idea to rotate employees to various jobs within a company. This may also reveal fraudulent activity as it allows a second employee to review the activities of the first.

5.Hire Experts

Certified Fraud Examiners (CFE), Certified Public Accountants (CPA) and CPAs who are Certified in Financial Forensics (CFF) can help you in establishing antifraud policies and procedures. These professionals can provide a wide range of services from complete internal control audits and forensic analysis to general and basic consultations.

6.Live the Corporate Culture

A positive work environment can prevent employee fraud and theft. There should be a clear organizational structure, written policies and procedures and fair employment practices. An open-door policy can also provide a great fraud prevention system as it gives employees open lines of communication with management. Business owners and senior management should lead by example and hold every employee accountable for their actions, regardless of position.

Fraud Detection

In addition to prevention strategies, you should also have detection methods in place and make them visible to the employees. According to Managing the Business Risk of Fraud: A Practical Guide, published by Association of Certified Fraud Examiners (ACFE), the visibility of these controls acts as one of the best deterrents to fraudulent behavior. It is important to continuously monitor and update your fraud detection strategies to ensure they are effective. Detection plans usually occur during the regularly scheduled business day. These plans take external information into consideration to link with internal data. The results of your fraud detection plans should enhance your prevention controls. It is important to document your fraud detection strategies including the individuals or teams responsible for each task. Once the final fraud detection plan has been finalized, all employees should be made aware of the plan and how it will be implemented. Communicating this to employees is a prevention method in itself. Knowing the company is watching and will take disciplinary action can hinder employees’ plans to commit fraud.

Conclusion

Those who are willing to commit fraud do not discriminate. It can happen in large or small companies across various industries and geographic locations. Occupational fraud can result in huge financial loss, legal costs, and ruined reputations that can ultimately lead to the downfall of an organization. Having the proper plans in place can significantly reduce fraudulent activities from occurring or cut losses if a fraud already occurred. Making the company policy known to employees is one of the best ways to deter fraudulent behavior. Following through with the policy and enforcing the noted steps and consequences when someone is caught is crucial to preventing fraud. The cost of trying to prevent fraud is less expensive to a business than the cost of the fraud that gets committed.

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The Southbourne Tax Group: How to Spot a Financial Accounting Fraud

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The Southbourne Tax Group: How to Spot a Financial Accounting Fraud

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Here are some signs of a possible dishonest employee:

1. Never wants to take a vacation.

There's a reason, and it's not workaholism. Bookkeepers behaving badly like to be in a position to intercept phone calls and correspondence. And as for the boss rifling through their desk to find something when they're out of the office -- that would be unbearable, of course!

2. Always has more work to do than can possibly get finished during normal working hours

So much, in fact, that they have to stay after everyone else goes home. Or, if you'll let them, they like to take the work home. This might not be the loyalty you expect: unsupervised work lets the bookkeeper tamper with records with less chance of discovery.

3. A tattletale. Likes to point out incompetence of other employees.

Pointing fingers at others puts an alibi in place, should you discover something amiss. Dan doesn't collect all his accounts. The deposit seemed too small? (It's Dan). Sharon hangs around the office when she doesn't belong there. There is postage missing? (Could be Sharon) Linda is disorganized. Why is this letter misfiled? (Linda is sloppy) Maybe the bookkeeper deposited some of Dan's deposit in her own account, and also purloined the postage. Linda's letter might be misfiled because the bookkeeper didn't want an auditor to see it.

4. Volunteers to take care of details that should be handled by the principals -- helping by picking up signature cards when you open a new bank account, for example.

The more details the bookkeeper handles, the more opportunity for sticky fingers, and the easier it is to cover things up.

5. Likes to pick up the mail, even if it makes more sense for a lower-level employee to take on that task.

The mail is both tempting and frightening to employees who steal. Checks come in the mail. So do unexpected notices that might tip you off to their theft.

6. Acts like bookkeeping tasks are as difficult as brain surgery, and twice as complex.

I dump any bookkeeper who can't explain things to me in terms I can understand. That goes double for accountants who respond to my nosy questions by taking offense. --She acts like she doesn't TRUST me!-- Yes. When they guilt trip you, watch your back.

7. Tells little fibs, perhaps unrelated to accounting

Little lies tell big stories about people's character.

8. Seems to feel that the company owes something; as if he has done more than could be expected of any reasonable person

In fact, most employees who take things really DO believe the company owes it to them. They may start by ...well, borrowing... then justify turning it into a theft by deciding you don't pay them enough.

9. Prints in precise, tidy letters, but can't seem to find things when you ask; shuffles some things into messy little piles.

Aha! This is a really good tip-off. People's habits aren't usually so schizo -- they are either consistently messy or compulsively tidy. Accountants, more often than not, fall into the tidy category. If you've got one that's tidy and messy at the same time, start spot-checking everything that looks messy.

10. Volunteers to take the following things off your busy shoulders:

1) Interfacing with auditors 2) personally making the police report if an item turns up missing 3) IRS correspondence.

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The Southbourne Tax Group - How to Spot a Financial Accounting Fraud

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Business Services

Small Business Accounting

As an owner of a small business, have many other valuable needs other than maintaining your accounting books. Our firm takes care of your bookkeeping to allow you to focus on running your company and producing income.

Every month or every quarter, as called upon, we can perform the following tasks for you:

Reconciling your bank account

Generate a balance sheet

Generate an income statement

Reconstitute your general ledger

Offer continuous consultations

We provide these services as the financial backbone of your small business accounting structure. You may design the mix of services you want to avail of by including tax planning, payroll, tax preparation or other services you may have in mind.

Bank Reconciliation

The Southbourne Tax Group can reconcile your business checking account for you every month to maintain an updated bank account, accounting schedule and tax status.

As such, you can then:

Determine if you have lost checks, missing deposits and unofficial wire transmittals.

Identify and avoid excess/unjustifiable bank fees and assures you of correctly-posted bank transactions.

Pinpoint and stop mismanagement of funds within your firm.

Want to find out the financial health of your business? You will never really achieve such information until all accounts are cleaned up and carefully reconciled and reflected on an accurate financial statement.

Take proper and efficient control of your cash usage. Wise funds management more than saves you money; it creates income, too.

Get protection for your business and yourself. By promptly reconciling and objecting to your bank regarding any unofficial, fraudulent or fake checks presented to your bank and encashed at that bank, you can avoid the responsibility for any shortfall and allow the bank to resolve the issue instead. You will unburden yourself of that trouble – one good reason for having the protection. And we know that illegal activities abound.

Get peace of mind. You can rest and be at peace at night if you know your bank accounts are reconciled and balanced and that all escrow funds, checks, accounts and disbursed funds are duly accounted for.

Balance Sheet

A balance sheet provides a quick view of your business' financial status at a specific point of interest.

Namely, a balance sheet can give the following benefits:

Get a quick outlook on your business’ financial capabilities and strength.

Pinpoint and evaluate patterns, especially in the area of payables and receivables. For instance, if you are taking longer time to complete your receivables, you may need to collect them more aggressively.

Evaluate if your business can readily manage the regular financial ebbs and flows of expenses and revenues.

Find out if your business can have the capability to expand.

Evaluate if your business is experiencing a slowdown in terms of your payables to prevent an unavoidable shortage of funds.

Assess if you have to take drastic measures to strengthen cash reserves.

Together with income statements, balance sheets provide the most essential elements in financial reporting to prospective lenders such as investors, banks and vendors who evaluate how much credit to offer you.

Income Statement

An income statement, also referred to as a profit-and-loss statement, essentially sums up a detailed list of all your revenues and subtracts another detailed list of all your expenses to provide a profit or loss statement for any period.

An income statement makes you do the following tasks:

Monitor revenues and expenses in order to determine the operating condition of your business.

Pinpoint which areas your business are above-budget or below-budget.

Monitor drastic rise in the frequency of your product returns or the cost of goods sold as a percentage of your sales.

Determine particular items produce unexpected expenses, such as phone, fax, mail, or supply inventory disbursements.

Determine your income-tax level.

Keeping a Neat General Ledger

The general ledger is the heart of your firm’s financial records. It constitutes the principal "books" of your accounting and financial systems. Since each transaction passes through the general ledger, any issue with your general ledger affects all your books.

Allowing us to evaluate your general ledger system every month makes us figure out any errors, such as double billings or any unaccounted disbursements. From there, we can remedy the discrepancies in order that your books will remain accurate and in proper order.

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We take this opportunity to get to know our staff as well as our company’s values even prior to meeting us. The following pages will provide an overview of what we are all about. Have a great time reading!

Our Values

The Southbourne Tax Group offers excellent service to our customers because of our commitment to the three principal pillars of professionalism, responsiveness and quality.

Professionalism

Our group is considered one of the foremost companies in the locality. By integrating our experiences, expertise and the creative abilities of our staff, each customer benefits from the professional and personal attention they provide.

Our company’s excellent standards, service and specialist staff will make the difference between our unparalleled performance and that of other companies. We assure every customer of being provided the expert service of our entire company.

Responsiveness

Responsiveness is a trademark of our company. Businesses who come to us for their needs depend on expert advice and prompt, accurate care from our staff. We offer comprehensive financial counseling and assistance to every individual, small or large enterprises and other entities.

To browse a selection of the services we provide, kindly take the time to visit our services page. Since we derive new business from those who have availed of our service, customer referrals have enhanced our progress as a firm in the past several years.

Through diligent work, we have gained the respect of the financial and business sectors. This respect showcases our various capabilities, our commitment and our readiness to respond at the fastest possible time.

Quality

A company engaged in accounting is measured by its quality of service. The Southbourne Tax Group’s reputation exhibits the high levels of standards we expect of ourselves.

Our main objective as a reliable counselor is to be always ready to deliver beneficial advice to allow our customers to confidently generate educated financial decisions. We do not shortchange ourselves or our customers by promising and providing anything less than that.

We believe it is of utmost importance to improve our professional know-how and capability in order to enhance our technical readiness to provide financial information and assistance to our customers.

Our top-quality service and "raving fan" customers arose from our perseverance to achieve excellence.

We commit to provide you with solutions to all of your issues, as to how they affect both your financial and tax status. Feel free to call us for any need.

GET IN TOUCH

Email

For inquiries please send us your email.

enquiry@thesouthbournegroup.com

Address

West Kowloon, 1 Austin Road, 82/F, International Commerce Centre, Hong Kong

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We provide a wide selection of small enterprise accounting services, including tax services for businesses and individuals.

WHAT WE DO?

Who We Are?

We take this opportunity to get to know our staff as well as our company’s values even prior to meeting us. The following pages will provide an overview of what we are all about. Have a great time reading!

Employment

The Southbourne Tax Group, invites diligent, professional accounting & tax experts with a minimum of four years of experience, including knowledgeable administrative managers with at least three years of experience.

Services

As an owner of a small business, have many other valuable needs other than maintaining your accounting books. Our firm takes care of your bookkeeping to allow you to focus on running your company and producing income.

Welcome to The Southbourne Tax Group

The Southbourne Tax Group is a complete-package Accounting & Tax company. We provide a wide selection of small enterprise accounting services, including tax services for businesses and individuals. Our services also include outsourced CFO support, bookkeeping support, local and remote service, payroll processing, QuickBooks support and many more! Our rates are reasonable and you get friendly service from our professional staff.