Surgery News - March 2008 - (Page 19) MARCH 2008 • SURGERY NEWS FINANCE COVERING YOUR ASSETS 19 Don’t Be a Victim of Tax Scams tax time Asapproaches, beware of the wrong advice or illegal tax avoidance BY CHARLES D. MABRY, schemes proM.D., FACS posed by “advisers” or on Web sites. Surgeons often fall prey to unscrupulous promotions and business deals, and tax scams are the most important ones to avoid. Getting on the wrong side of the Internal Revenue Service can mar your career and even result in jail time. Residents and young surgeons are especially at risk since they are most likely to lack good legal and accounting advice. What to do? First, hire a qualified accountant. Check the person’s references as well as the Better Business Bureau and state board of accountancy. When you meet, the accountant should ask you for records and receipts. If the tax preparer is not an Enrolled Agent, CPA, or licensed attorney, he or she can represent you at an audit of the tax return, but not before the IRS for more extensive audits, collections, or appeals (see www.irs.gov/newsroom/article/0,,id=12 0129,00.html). Which tax scams most commonly target surgeons? Here are the top five schemes that surgeons should seek to avoid. (Other scams may be found at www.irs.gov and http://doctorsforadults. com). Abuse of Roth IRAs. This new tax scheme tries to circumvent the annual maximum contribution limit, allowing otherwise taxable income to go untaxed, by shifting undervalued property to a Roth IRA. Improper use of domestic or foreign shell corporations. This scheme involves setting up a shell corporation, either here or abroad, and then shifting income, creating bogus expense invoices, claiming foreign tax credits, etc. Structured entity credits. Promoters sell you shares of a partnership or limited liability company that contains conservation easement, federal rehabilitation, energy depletion, or other tax credits. The credits are the only asset owned by the company, and once they are depleted, you receive a K-1 indicating that your investment is a total loss, which you then use as a deduction on your tax return. But this partnership was never a viable business entity, and thus the losses are not deductible. Incorrect income tax preparation. Typically, this involves misstatements of facts and frivolous claims, such as misuse of American Indian Employment credits, a claim of zero wages on a “corrected Form 1099,” deduction of all of your income on Schedule A, a telephone excise tax refund overstatement, misuse of Form 843 tax abatement, or abuse of charitable organizations and deductions. Any claim deemed frivolous results in additional special penalties (www.irs.gov/newsroom/ article/0,,id=177519.00.html). Misuse of trusts, life, or disability insurance. This scam promises reduction of taxable income, deductions for personal expenses, or reduced estate/gift taxes by transferring assets into various trusts or by buying bogus insurance. Innumerable variations or combinations of this scam are promoted to doctors, often successfully. In the case of the Xelan company, for example, doctors “donated” money to a charitable trust, which they then used for personal purposes. Their business could also buy “disability insurance,” writing off the premiums as a business expense. The plan was for physicians to later get their money back tax free. Xelan sold these products to more than 4,000 medical professionals, until the IRS forced the company to shut down in 2005. Many doctors lost money and had to pay back taxes to the IRS (www.fraudsandscams. com/Xelan.htm or www.quatloos.com/ tax_scams.php). As tax time approaches, be wary of these scams and check the Web sites listed in this article. Be sure to file income taxes properly—ideally with the help of a competent tax advisor. ■ DR. MABRY serves on the finance committee and investment subcommittee of the ACS Board of Regents and is the series editor for the ACS Practice Management Course for Residents and Young Surgeons. 2008 Coding Workshops American College of Surgeons 2008 Coding Workshop Series for Surgeons and Their Staff DE NVE R LAS VEGAS DALL AS DENVER, CO FEBRUARY 28, 2008 2008 Introduction to CPT, ICD-9-CM, and Evaluation and Management Coding FEBRUARY 29, 2008 2008 Surgical and Office-Based Coding and Reimbursement (Advanced) C H ICAGO DALLAS, TX AUGUST 7, 2008 2008 Introduction to CPT, ICD-9-CM, and Evaluation and Management Coding AUGUST 8, 2008 2008 Surgical and Office-Based Coding and Reimbursement (Advanced) For more information and to register, go to LAS VEGAS, NV APRIL 10, 2008 2008 Introduction to CPT, ICD-9-CM, and Evaluation and Management Coding APRIL 11, 2008 2008 Surgical and Office-Based Coding and Reimbursement (Advanced) CHICAGO, IL SEPTEMBER 18, 2008 2008 Introduction to CPT, ICD-9-CM, and Evaluation and Management Coding SEPTEMBER 19, 2008 2008 Surgical and Office-Based Coding and Reimbursement (Advanced) http:// www.facs.org/ ahp/workshops/ index.html or contact Debra Mariani, Practice Affairs Associate, tel. 202/672-1506, e-mail dmariani@facs.org http://www.fraudsandscams.com/Xelan.htm http://www.quatloos.com/tax_scams.php http://www.fraudsandscams.com/Xelan.htm http://www.quatloos.com/tax_scams.php http://doctorsforadults.com http://www.irs.gov http://doctorsforadults.com http://www.facs.org/ahp/workshops/index.html http://www.irs.gov/newsroom/article/0,,id=177519.00.html http://www.irs.gov/newsroom/article/0,,id=177519.00.html
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