Tax Preparer Barred for Filing Fraudulent Returns
A federal court in the Eastern District of New York has permanently barred a tax preparer and her business, from preparing or filing tax returns for others. She consented to the injunction following charges of aiding in the preparation of false tax returns.
This ruling highlights the importance of vigilance when selecting a tax preparer and serves as a reminder for taxpayers to stay aware of fraudulent practices.
Why Was the Tax Preparer Barred from Tax Preparation?
According to the Justice Department, between 2019 and 2023, she prepared more than 500 tax returns per year, many of which contained false claims that improperly reduced her clients’ tax liability or inflated their refunds.
Fraudulent Activities Included:
- Falsely claiming residential energy credits and education credits for ineligible customers
- Fabricating filing statuses and adding fictitious dependents to secure larger refunds
- Engaging in other improper tax return practices
The tax preparer pleaded guilty to the charges and agreed to a permanent injunction as part of her plea deal.
What the Court Order Requires:
She must notify every client for whom she prepared a tax return or claim for refund between January 1, 2019, and the present about the injunction.
Protecting Yourself from Unscrupulous Tax Preparers
This case underscores the importance of choosing trustworthy tax preparers. Here’s how you can protect yourself:
1. Check IRS Credentials
The IRS maintains a Directory of Federal Tax Preparers, where you can verify a preparer’s credentials and qualifications.
2. Avoid Red Flags:
- Promises of unusually large refunds
- Requests to sign blank tax returns
- Preparers who refuse to sign your tax return or provide a PTIN (Preparer Tax Identification Number)
3. Review Your Return Thoroughly:
Always review your tax return for accuracy before signing and ensure that all information is correct and complete.
4. Report Fraud:
If you suspect fraudulent activities by a tax preparer, report the issue to the IRS Criminal Investigation Division or contact the Justice Department’s Tax Division.
What Happens to Tax Preparers Found Guilty of Fraud?
In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of fraudulent tax preparers. Violators can face permanent injunctions, fines, and even prison time.
An alphabetical list of enjoined tax preparers is available on the Justice Department’s website. Taxpayers who believe an enjoined preparer is violating a court order should report it to the Tax Division.
Final Thoughts
This ruling serves as a warning to taxpayers and tax professionals alike. Vigilance and accountability are crucial in ensuring accurate and honest tax filings. As the tax season is here, be cautious, do your research, and always choose reputable tax preparers.
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