Filing 100 dodgy income tax returns earns TPB termination

TPB tax returns Ian Klug fraud

24 September 2020
| By Mike |
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A tax practitioner who lodged over 100 income tax returns without checking the identity of the clients has had his registration terminated by the Tax Practitioners Board (TPB).

The TPB urged all tax practitioners to ensure that they take appropriate steps to validate a taxpayer’s identity, and to not risk compromising client data which may lead to fraud.

In doing so, the TPB said its concerns followed a recent case where a registered tax practitioner failed to take appropriate steps in handling and verifying client data.

As a result, the TPB determined that the agent breached items of the Code of Professional Conduct in the Tax Agent Services Act 2009 relating to competency, honesty and integrity.

It said the tax practitioner, from Western Sydney, was approached by three individuals who asked him to lodge in excess of 100 income tax returns (ITRs) on behalf of their associated employees. They provided false documentation on behalf of these employees. The agent agreed to lodge these ITRs without undertaking any proper enquiries about the identity of these taxpayers. The agent’s recklessness facilitated fake tax returns and in turn fraudulent refunds.

The TPB terminated the agent’s registration and imposed a five-year non-application period. On appeal, the Administrative Appeals Tribunal affirmed the TPB’s termination decision, and varied the non-application period from five years to four years, noting that while there was no direct evidence of dishonesty “…the applicant’s lack of rigour in the conduct of his affairs and his apparent disregard for the duties of his role adds up to something that is almost as bad, and which certainly reflects poorly on his integrity and character. He may not be dishonest, but he has not demonstrated the commitment to competent and conscientious behaviour that one would expect of a tax agent.”

Commenting on the issue, TPB chair, Ian Klug, said the TPB was concerned to have seen a recent increase in cases relating to poor client verification processes.

“The verification of client data is of utmost importance in the interaction between tax agent and their client. The TPB is shortly to issue a practice note, which aims to give clear guidance on proof of identity checks and the policy around them.”

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