2005 Scam Highlights

1. Credit Counseling. The IRS warns taxpayers to be careful with credit counseling organizations that claim they can fix credit ratings, promote debt payment agreements or charge high fees, monthly service charges or mandatory “contributions” that may add to debt. The IRS Tax Exempt and Government Entities Division has made auditing credit counseling organizations a priority because some of these tax-exempt organizations, which are intended to provide education to low-income customers with debt problems, are charging debtors large fees, while providing little or no counseling.

2. Identity Theft. It pays to be choosy when it comes to disclosing personal information. Identity thieves have used stolen personal data to access financial accounts, run up charges on credit cards and apply for new loans. The IRS is aware of several identity theft scams involving taxes. In one case, fraudsters sent bank customers fictitious correspondence and IRS forms in an attempt to trick them into disclosing their personal financial data. In another, abusive tax preparers used clients’ Social Security numbers and other information to file false tax returns without clients’ knowledge. Sometimes scammers pose as IRS itself. Last year IRS shut down a scheme in which perpetrators used e-mail to announce to unsuspecting taxpayers that they were “under audit” and could set matters right by divulging sensitive financial information on an official-looking Web site. Taxpayers should note IRS does not use e-mail to contact them about issues related to their accounts.

3."Claim of Right" Doctrine. In this scheme, a taxpayer files a return and attempts to take a deduction equal to entire amount of his or her wages. The promoter advises taxpayer to label deduction as “a necessary expense for production of income” or “compensation for personal services actually rendered.” This so-called deduction is based on a misinterpretation of Internal Revenue Code and has no basis in law.

"Historically, investment opportunities afforded by forex trading have gone largely unrealized because, up until a few years ago, market had been exclusive domain of governments, banks, institutional investors, and brokerage houses. Now, through ForexInterBank, investors can learn how to take advantage of those opportunities using a forex trading course designed to simplify process and to accelerate learning curve," say Keister, a medical doctor who first started trading forex while he was in medical school.

According to Keister, forex trading, while well known in ‘inner circle’, is only now beginning to get attention of both day traders and private investors. "Ten years ago, it was difficult to find a day trader or private investor who was familiar with market. Now at least half of people I talk with are at least mildly familiar with market and half of those have actually dabbled in it," he says.

Keister attributes this increased interest level to a number of problems unique to equities and futures trading. "The biggest problem is that price fluctuations on equities and futures markets are all too often a direct result of manipulation and/or buying and selling habits of major investors. Prices are not driven as much by supply and demand as they are driven by market makers, media hype, and large institutional investors who have financial means to literally make or break a stock overnight," he says.

The forex spot market, according to Keister, isn’t subject to that kind of manipulation. The average daily turnover in forex spot market is approximately $1.3 trillion dollars, 30 times turnover of all equity and futures markets combined. Unlike equities and futures markets, forex market fluctuations are driven by pure supply and demand - purchase and sale of foreign goods and services and, of course, speculation.

Experts estimate that 5% of market’s turnover is actually driven by trade imbalances, remaining 95% comes from speculation. "One doesn’t have to be an economist to understand that it is virtually impossible for any entity to manipulate a market of such an immense size," Keister says.

"What makes forex even more attractive is that one doesn’t have to waste time spending endless hours doing technical analysis and studying fundamentals that, as I mentioned before, can be totally invalidated by actions of insiders and major investors," he says. "Forex trades, while certainly not without risk, can be profitably and predictably executed without endless and sometimes fruitless study."

A second drawback to equity and futures markets is that once made investments are not very liquid. "Investors can’t react immediately to fluctuations in equity and futures markets because those markets are not ‘openly’ traded 24 hours a day. A lot can happen between closing and opening bells, let alone over a long weekend, and if investor sleeps late, he may wake up to find upon opening that he has suffered significant losses," he says.

"By contrast, forex market never closes. Once a trade has been initiated, investor has ability to modify parameters of that trade 24 hours a day."

Perhaps biggest factor making forex trading attractive is that trades are not commission driven or heavily fee based and this is why Keister got involved in forex pivot point trading in first place ten years ago. "Like most investors, when I started looking for ways to invest my money, I began process working with stockbrokers who were more interested in churning my accounts than they were providing me with information I needed to make ‘my’ cash register ring," he says.