Offering an example of one of its “Dirty Dozen Tax Scams,” the Internal Revenue Service (IRS) permanently barred a tax professional from preparing tax returns for others.
Ms. Lucrezia Finch Henderson was a tax preparer at Infinity Tax in Lagrange, Georgia. After an IRS criminal tax investigation, Ms. Henderson was accused of preparing false tax returns to reduce the tax liability of her clients. The fraudulent tax returns identified businesses that did not exist and claimed losses that were never experienced. Ms. Henderson also liberally made use of education credits for clients who had no educational pursuits during the filing year.
Overall during the criminal tax audit, investigators looked at 110 returns Ms. Henderson had prepared. They found Ms. Henderson had erased approximately $650,000 in tax liabilities on that group of returns alone. As a result, the IRS closed in and Mrs. Henderson will not legally be preparing tax returns for others in this lifetime.
The importance of a reputable tax preparer
Tax preparers play an important role in the documentation and delivery of accurate returns and appropriate tax payments to state and federal agencies. Consumers and businesses who utilize tax preparers often do so because they want to ensure their tax returns are legitimate and that their tax payment and return are appropriate.
According to the IRS, about 56 percent of the taxpaying public uses a tax professional to prepare their personal or business tax return. A problem arises when tax preparers try to sweeten the pot for their clients, either with or without their knowledge. Although responsible for the accuracy of their tax return, many filers sign and submit their professionally prepared returns without reviewing the content.
Ms. Henderson is just one of many tax preparers pursued by the IRS when a tax audit offers evidence of a questionable tax return. As criminal tax defense attorneys, we work regularly with consumers and business owners who are experiencing a tax controversy, or find themselves facing an IRS civil tax audit as a result of filing a fraudulent tax return. Protecting yourself from tax litigation starts with ensuring your tax professional is using best practices to ensure your taxes are accurately prepared.
The IRS provides a free directory of qualified federal tax return preparers and tips for choosing a tax professional to prepare your taxes, including:
- Check history: Do not make use of pop-up preparers who open a storefront as tax season approaches. Look for tax professionals who are longtime members of your business community with references and a good reputation to match. You want to be sure your tax preparer is around if you—or the IRS—have questions about your return.
- Credentials: Do your homework on credentials, including agencies and associations who license preparers. Ask if your preparer has an IRS Preparer Tax Identification Number (PTIN), which indicates registration with the IRS.
- E-file: A reputable, knowledgeable preparer will require your signature on a prepared return (not a blank return) and file your return electronically to ensure the safety of your filing. Stay apprised of the status of your tax preparation and filing to make sure that you—and no one else—receives your tax return.
Ms. Henderson will have to mail a copy of the injunction barring her employment as a tax preparer to clients she served from January, 2015 forward. She also needs to find a new line of work.
Highly qualified legal representation with tax controversy or criminal tax defense in Cleveland and Chicago
From offices in Cleveland and Chicago, the law offices of Robert J. Fedor, Esq., LLC provide reputable, knowledgeable legal representation and strategic tax solutions to the challenges of tax fraud, offshore tax issues, and criminal tax matters. Call us at 800-579-0997 today or contact us online.