The Internal Revenue Service (IRS) continues to crack down on return preparer fraud. It has listed this tax crime as one of its Dirty Dozen tax schemes — meaning it will focus resources towards investigating allegations of this crime.
What is tax return preparer fraud?
This broad term can encompass a number of tax crime allegations. Examples can include a failure to furnish a copy of filings to the taxpayer, failure to sign the return, failure to file correct information, failure to be diligent in determining eligibility for certain tax benefits, and making false statements on tax returns.
If convicted, penalties can include serious monetary fines and potential imprisonment.
What happens if the feds accuse a business or individual of this type of tax crime?
In a recent example, a federal court in the Eastern District of New York shut down a local tax prep business. The case involved the owner of a tax return preparation business out of Brooklyn. Allegations included the following:
- Improper tax filing status
- Improper claim of head-of-household
- Fraudulent dependent exemptions
- Improper losses to reduce taxable income
When presented with the evidence, the accused agreed to a permanent injunction and restitution of $150,000 in fees.
What should I do if I am accused of tax return preparer fraud?
You will likely receive notification through a mailing. This correspondence should include information about a potential penalty and the reason for the allegation. Review this information carefully before coming up with a plan.
It is also important to note that you do not have to go through this process alone. As noted above, the penalties are serious. The attorneys at Goldburd McCone can advocate for your interests and build a defense tailored to your situation, working to better ensure a more favorable outcome.