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Warning! ... Your Assignees Could be Victims of International Tax Fraud

CompassGUIDES - Jan 2006

By Diana Matwichuk, Assignment Planning Specialist

The fax from our client set off alarm bells. “Does this look legitimate to you?” Fortunately, he had worked in the United States for a number of years and was familiar with IRS documents. The IRS seal was fake, and a quick check of the IRS website confirmed that the form does not even exist.

Thinly disguised as (valid) Form W-8BEN, our client had received a phony Form W-8BEN 11 requesting that bank account and personal information be faxed to a Miami, Florida number. It seems the IRS taxpayer information database may have been breached and taxpayer information stolen.

In addition to numerous grammatical errors, which were clear tip-offs, the form did not follow standard IRS document format. Personal information such as passport number and “Mother’s maiden name” were being requested.

Wait a minute. Not your maiden name – your mother’s. Why would the IRS even care about that gem, unless they were playing name games with Rumplestiltskin? (Of course, if you could spin straw into gold, you wouldn’t be receiving W-8BEN 11 forms, you’d be working for the IRS!)

The moral of this story is to alert your assignees to the possibility of international tax fraud. They should be aware of the possibility of receiving phony documents, and preferably handle all tax correspondence, both with the CRA and local tax authorities, through a tax services provider. Since our client had provided us with Power of Attorney for tax matters, it was also an unusual occurrence for him to personally receive tax correspondence, rather than through our office.

At CompassGUIDES, we develop cost-effective assignment tax programs for Canadian companies sending employees around the world and bringing international consultant expertise to their Canadian projects. These Assignment Tax Programs generally include the provision of pre-departure counseling, in which assignees are briefed on what to expect in terms of host country and/or domestic taxation. Anything out of the ordinary would be investigated by our offices, as with this tax fraud case.

For more information on assignment planning and the development of Assignment Tax Programs, visit our International Assignment Planning Help Desk. Our professionals will promptly answer your questions, or point you in the right direction with our network of affiliates.

The author wishes to thank Peter Simpson, CA for his contribution to this article.

 


Tel: (403) 531-2200 
Fax: (403) 263-1826


Web: www.compasstax.ca
Suite 600, 1333 8th Street SW
Calgary, Alberta Canada  T2R 1M6


Tel: (403) 531-2200 
Fax: (403) 263-1826


Web: www.compassguides.ca
Suite 600, 1333 8th Street SW
Calgary, Alberta Canada  T2R 1M6