Tax fraud is a huge problem for CPAs, as clients usually turn to their advisor when the IRS steps in. It’s incredibly important for a CPA to remain vigilant at all times during tax season in order to look out for potential problems; failure to comply could lead to allegations of sheltering a fraudster, significant fines, or disciplinary action. The latter has the potential to devastate a CPA’s company, their personal reputation, and ultimately their career.
With an office in Delaware and its headquarters in California, Intuit is an American-owned software company that creates and distributes financial and tax preparation software to make your role as a CPA far simpler, and easier to understand. The purpose of such software, which includes TurboTax and QuickBooks, is to enable a CPA to provide an efficient, reliable, professional service to clients, without the need for paperwork or complicated systems. Hosted online, the data that such software contains is more transparent, while automatic security alerts can be sent to clients and CPAs alike to reduce the risk of fraud or misinformation.
Unfortunately, Intuit is not without controversy. In February 2015, it was alleged that two former employees at Intuit had knowingly allowed users of its software to file fraudulent tax returns and refund applications. These employees claimed that the company’s efforts to track such fraud had been scaled back in the wake of clients, and therefore fraudsters, turning to the company’s competitors, and in a bid to maintain and increase shares. While the company was quick to retort, the damage had been done. TurboTax was suspended for a short period while claims were investigated, and the company’s reputation was permanently tarnished. You can read the company’s full disclosure here.
Fighting tax fraud
In light of the allegations of fraudulent activity, Intuit has made a number of improvements in order to help LA CPAs fight tax fraud, including applying new protocols and building a better, more communicative relationship with the IRS. The company has, for example, altered the way in which information is passed to the IRS in order to make it more accurate, and to reduce the risk of missing or incorrectly identifying instances of fraud.
So, how exactly is Intuit fighting tax fraud?
Owing to recent allegations, Intuit now identifies and shares suspicious patterns of activity with the IRS via a specially formulated fraud scoring system, which now operates at a greater speed and efficiency. Security is under constant development at Intuit, with innovations frequently explored and employed. These include a multi-factor authentication process, encryption technologies, analytics, and cloud-based data storage, as well as an increased investment in training courses. QuickBooks, which is the software that, you as a CPA or your clients, are likely to use has an optional audit trail. Monitoring your clients’ activity has never been safer or more reassuring.
Companies such as Intuit, which also produces the popular accounting software QuickBooks, are developing increasingly sophisticated means by which CPAs and the IRS can detect tax fraud before a client is able to get away with it. Such processes are by no means foolproof, but are fighting against tax fraud, alongside the intuition of practicing CPAs everywhere.
Has your accountancy firm run into this issue? Do you have any advice for other CPAs who are running into this? Please share your thoughts with us in the Comments section below.
To follow through on the tips introduced in this article, be sure to download our free guide 12 Ways for CPA Firms in LA to Utilize Technology More Efficiently.