Robert J. Fedor, Esq., L.L.C.

Business owners must be careful when selecting tax preparer

We've previously discussed in this blog the fact that small business owners must take on many roles. However, for many small business owners, the role of tax professional is often one they shouldn't assume. Tax-related codes, rules, laws and documents can be complex and confusing and we've previously reported on tax crimes cases that resulted when business owners attempted to prepare and file their own taxes.

To avoid tax troubles, many business owners hire professional tax preparers. One recent case involving an 84-year-old man and nearly a $500,000 tax debt proves, however, why small business owners must be vigilant and cautious when choosing a tax professional.

An 84-year-old man, who was employed as an independent tax preparer, recently pled guilty to charges related to tax crimes including tax evasion and mail fraud. According to court documents, for the tax years 2006 through 2010, the 84-year-old stole money from clients that was intended to be paid to the Internal Revenue Service.

In total, the former tax preparer is accused of stealing nearly $500,000 dollars from small business clients. The money was deposited into the man's personal account and used for his own financial gain. The 84-year-old recently agreed to enter a guilty plea in hopes of receiving a reduced sentence.

This case illustrates how even well-intentioned small business owners can get into tax trouble. In this case, investigators were able to trace the missing assets to the tax preparer. In other cases involving tax preparers who engage in tax evasion and tax fraud, evidence isn't as clear cut and small business owners may face criminal charges.

Source: The Republican, "James Hansmann of Agawam pleads guilty to mail fraud, tax evasion," Patrick Johnson, Oct. 10, 2013

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