I’ve said it before and I’ll say it again. I am fully aware that most accountants, CPAs, and certified tax preparers are honest, hardworking people whose major objective is to get the best return or minimum tax payment for their clients. In pursuit of this goal, however, some tax preparers may overpromise and then cross the lines of legality in their desire to fulfill their promises. Then again, there are those who consciously decide to commit fraud and use their client information to file false returns, steal their client’s returns or otherwise participate in criminal activity. One case came to light when the U.S. Department of Justice published a press release regarding a series of alleged tax crimes that occurred in Kalamazoo, Michigan by a tax preparer who billed herself as the #1 Tax Lady. Currently this is an indictment only, so charges have been filed but not yet proven. Allegedly the #1 Tax Lady “provided false information to the IRS to ensure that her clients would receive large tax refunds.” It is recorded that she did this on 482 tax returns that resulted in deductions approaching $2 million. This could result in a prison sentence of 5 years for each of the 482 charges. This same preparer also faces charges for alleged improprieties on her own income tax filings for 2010 and 2011. According to the Department of Justice press release, “Prosecutors have alleged that the #1 Tax Lady did not report the income from her tax preparation business in these returns and that she claimed a deceased individual as a dependent. Upon conviction, filing a false return can be punished with a prison sentence of up to 3 years.” If this tax preparer is found guilty, she will be spending a very long time in prison and her clients will wish they never knew her Taxpayer Responsibility The point of sharing this story is in the spirit of helping innocent taxpayers avoid making the mistake of being fooled by those rare preparers who are willing to cross the line and make outrageous promises about huge returns or minimal tax payments. That’s because those taxpayers who employ the services of the preparer who is being investigated or indicted are held responsible for reviewing the returns and agreeing to what is on the returns. If the taxpayers’ returns are scrutinized, and they will be when the preparer is being indicted for fraud, and it is decided that they owe taxes, they will be held liable for paying the back taxes as well as any and all penalties and interest due. The taxpayer could also be charged with perjury since signing a tax return means everything on it is true. The IRS will work with taxpayers who may not be able to pay their taxes when they are due. A reputable tax attorney can work with you if you have been caught up in tax preparer fraud. Be scrupulously honest with your tax returns. Make sure you always review your returns carefully when they are prepared for you. Paying taxes may be difficult and seem unfair. But staying on the right side of the law when it comes to taxes is the best side to be on.
By: The Law Firm of Lance R. Drury, P.C. May 19, 2015