Identifying Fraudulent Documents: Tips for Tax Professionals

Tax professionals come into contact with important documents that are used in the preparation of tax returns. These same documents are also required in order complete various other financial dealings, including obtaining mortgage, a credit card, etc.  It is not uncommon for individuals to create fake documents and attempt to pass them off as originals for the purpose of financial gain. There are several ways that would-be fraudsters produce fraudulent paperwork. Usually these methods of fraudulent document production include altering real documents issued by the issuing agency or creating wholly new fraudulent documents that appear to have been issued from a specific issuing agency. Be sure to inquire about documents that appear to have been altered or appear questionable in any way.

The first tip for identifying fraudulent documents is to look for  the appearance of tampering. In passports, tampering could look like just enough damage to the photograph area to obscure the photo. It could also be changing the booklet numbers. In birth certificates, the fraud action could be altering the birthdate or even a parent listed. Letters and numbers may be superimposed over the actual data and then copied so the copy will appear as if it were issued with the fraudulent information. In addition to being able to identify any tampering or altering, we need to know what format and key identifiers we should expect to see.

Other less obvious signs of fraud on documents would be font differences where they should be the same font or there is a standard font for it and the entire section is a different font. Other security features should be sought to confirm a document’s authenticity such as security fibers embedded in the paper or optically variable devices. The types of security features used by governments vary by location and time period, so it is not uncommon for newer security features to be missing on older documents. Another tip is to purchase a publication designed for International ID verification. These types of guides will allow you to verify an ID document based on when and where it was issued.

Another type of fraudulent document that a tax professional may encounter could be real documents produced to lend credence to a falsehood in the commission of a financial crime. For example, mortgage fraud and tax fraud both occur when a fraudster reports artificially inflated income figures to the IRS in order to obtain a larger mortgage. Sometimes the fraudster is attempting to get a larger tax refund by reporting artificially reduced income figures. Our final tip here is to be aware of the ways that people will attempt to use fraudulent documents. Develop a set of best practices for your office on how to deal with these scenarios when they arise.

For more detailed training on identifying fraudulent documents, we offer an extensive online training course that satisfies the IRS requirement for forensic training for certifying acceptance agents who wish to assist their clients in obtaining Individual Taxpayer Identification Numbers (ITINs).