Beware of lodging income tax returns on behalf of others

Beware of lodging income tax returns on behalf of others

The Tax Practitioners Board (TPB) has recently investigated a number of tax agents who lodged income tax returns containing false payment summaries and other false information. The income tax returns were lodged in the names of genuine taxpayers whose identities had been stolen. Third parties had approached registered tax agents advising that they were acting on the authority of a number of other taxpayers. The third parties then provided false payment summaries and other false details in organised attempts to defraud the tax system. The TPB investigated and found that in many instances the tax agents involved had failed to carry out basic checks before lodging the income tax returns. For example, in nearly all cases, the tax agents had not made contact with the taxpayers before lodging their income tax returns, or verified any of the information contained within the returns and generally charged higher fees than their normal fee. Following the conclusion of these recent investigations, the TPB:

• terminated the registration of four tax agents;
• suspended the registration of two tax agents; and
• accepted the surrender of another tax agent’s registration.

“As a registered tax agent, you may be approached by third parties asking you to lodge income tax returns on behalf of others in the community. ” Tax agents should be particularly wary of requests to lodge multiple income tax returns on behalf of community groups, workplace groups or overseas students and/or itinerant workers. In these situations the TPB says that a registered agent should take reasonable steps to establish the identity of the person they are lodging an income tax return for and verify the information. Such steps may include direct contact with the client or through ATO portal access. “If you cannot confirm the details you have been provided with are correct you should explain your responsibility as a registered tax agent and decline to prepare and lodge the income tax returns.” If an agent does not take reasonable care in ascertaining a client’s state of affairs, they may breach the Code of Professional Conduct and could be at risk of breaching a civil penalty provision.