Did you prepare fraudulent tax returns this year or submit a knowingly false return? If so, this blog is for you.
There are many people who look for help preparing their taxes each year. Tax preparation is an important financial service that enables taxpayers to pay what they owe to the IRS on a timely basis and receive an appropriate refund. If you are a tax preparer, you may have a roster of regular clients for whom you prepare returns and related tax materials each year. So, when can tax preparation turn into tax fraud?
Information on a tax return must be accurate. Sometimes taxpayers do not fully disclose their income or offshore assets to their tax preparer. It is incumbent upon the taxpayer to provide their full and complete financial status.
In other instances, the tax preparer introduces inaccurate information in an income tax return—sometimes in collusion with their client. Knowingly creating a false income tax return is tax fraud. Some examples of fraudulent tax preparation include:
- Ghost preparers: The IRS warns consumers about ghost preparers. Ghost preparers may use a host of fraudulent tactics to unsuspecting clients. The term “ghost” arises when a tax preparer does not sign their name to the returns they prepare, nor do they provide the required Preparer Tax Identification Number (PTIN). Ghost preparers usually print off the return and give it to the taxpayer to sign and mail. A fee is charged for the return. Sometimes a higher fee is charged for the size of the refund shown on the return. Ghost preparers takes the money and run. The lack of preparer signature flags the return, and the taxpayer is on the line for the fraudulent tax return.
- Serial tax return fraudsters: A seasoned tax preparer may occasionally or frequently create tax returns they know to be false. They may create a fraudulent return at the request of their client or work the numbers so that the client receives a higher refund—and accordingly—pays a higher fee for the preparation of the return.
- False tax returns: Tax returns can be manipulated in many ways, including reduction of reported income, fake tax deductions, and phony qualification for tax credits. Tax preparers may also create tax returns that route refunds into their bank account, from which they disburse the “refund” to the taxpayer.
The IRS frequently puts fraudulent tax preparers out of business. Many people rely on accountants and tax preparers to help them meet the April filing deadline. It is a high priority of the IRS to warn and educate taxpayers about the consequences of filing a false income tax return and correspondingly, how to spot an unscrupulous tax professional.
Preparing a false tax return is a tax crime. You may not get caught at the outset, but it is likely you’ll get caught down the road. If you are engaged in income tax return fraud, you are aware of it. There is a decision that anyone involved in a tax crime makes when they step over the line. It is an acceptance of risk in return for a payoff of some kind. Similarly, there is another decision point when risk transforms from a concept to a tangible reality. At that point, you may not know how to escape the situation in which you find yourself.
If you are involved in any kind of criminal tax matter, it is critical to realize the risk. Prosecution, penalties, and incarceration are hard stops that may be closer than you believe. When that clear-eyed morning dawns, speak with an experienced criminal defense tax attorney as soon as possible.
Experienced legal representation if you are facing allegations of tax fraud or other criminal tax charge
if you are challenged by a tax controversy in Cleveland, Chicago, or elsewhere, the tax attorneys at Robert J. Fedor, Esq., LLC can help. We deliver seasoned, strategic criminal tax defense. Call us at 800-579-0997 or contact us online.