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Be cautious with year-end tax planning


Don’t fall victim to a tax reduction scam targeting physicians

taxes, phishing, falsifying income, healthcare fraud

Tax reduction sales-pitches of varying legality aggressively target doctors every fall. Here are some basics every physician should consider to stay on the right side of the law.

Unfortunately, not all tax plans are created equal, nor are those selling and managing them. Some tax landmines are overtly fraudulent sales pitches and simply lack any basis in the law.  Others are based on sound legal tax strategies but may not follow the law in the way they are actually used or merely have the appearance and title of a proven strategy. Either way, you the taxpayer are legally responsible for your tax return (potentially including both civil and criminal liability) regardless of who you took advice from and how much you paid for it. Liability may include audits, interest charges, fines and penalties and significant legal defense costs that may actually exceed the tax savings you were originally after.

Beware the Dirty Dozen

The IRS website is always my first stop for current info on any tax issue and they do a great job of laying out the basics that consumers need to understand in relatively plain English. One source of guidance that they update every year is their so-called Dirty Dozen List. Here’s what they put out for 2019

Return Preparer Fraud: The vast majority of tax professionals provide honest, high-quality service but there are some dishonest preparers who operate each filing season to scam clients, perpetuate refund fraud, identity theft and other scams that hurt taxpayers. (IR-2019-32)

Inflated Refund Claims: Taxpayers should especially beware of those promising inflated tax refunds and who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund. Fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high. (IR-2019-33)

Falsifying Income to Claim Credits: Con artists may convince taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. You are legally responsible for the accuracy of your return and face large bills to pay back taxes, interest and penalties if it’s not. (IR-2019-35)

Falsely Padding Deductions on Returns: Avoid inflating deductions or expenses on tax returns to pay less than what you actually owe or receive refunds. Do not overstate deductions, such as charitable contributions or business expenses, or improperly claiming credits, such as the Earned Income Tax Credit or Child Tax Credit. (IR-2019-36)

Excessive Claims for Business Credits: Avoid improperly claiming the fuel tax credit, which is usually limited to off-highway business use, including use in farming. Avoid misuse of the research credit, failures to participate in or substantiate qualified research activities or satisfy the requirements of qualified research expenses create liability. (IR-2019-42)

Offshore Tax Avoidance: It’s perfectly legal to have money and income offshore, but you do have to report it.  If you have unreported offshore entitles and accounts, get legal help and take voluntary remedial action. (IR-2019-43)

Frivolous Tax Arguments: Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000. (IR-2019-45)

Abusive Tax Shelters: Abusive tax structures including trusts and syndicated conservation easements are sometimes used to avoid paying taxes. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered. (IR-2019-47)

Fake Charities: Be wary of charities with names similar to familiar or nationally known organizations. You can check the status of charitable organizations at (IR-2019-39)

Phishing: Beware of fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on one claiming to be from the IRS. (IR-2019-26)

Phone Scams:  The IRS has seen a surge of calls from criminals impersonating IRS agents phone scams in recent years. Con artists threaten taxpayers with police arrest, deportation and license revocation, among other things. (IR-2019-28)

Identity Theft: Taxpayers should be alert to tactics aimed at stealing their identities all year long. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else’s Social Security number. (IR-2019-30)

Our next discussion examines specific and often abused tax plans including opportunity zones, captive insurance, and life insurance sales. 

Ike Devji, JD, has practiced law exclusively in the areas of asset protection, risk management and wealth preservation for the last 16 years. He helps protect a national client base with more than $5 billion in personal assets, including several thousand physicians. He is a contributing author to multiple books for physicians and a frequent medical conference speaker and CME presenter. Learn more at

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