WASHINGTON — Choose carefully when you pick someone to do your taxes. The Internal Revenue Service is warning people that they — not the tax preparer — are responsible if a fraudulent return is submitted under their name, even if they were unaware of the fraud. And with that responsibility comes the cost of penalties and interest on any additional taxes that might be due.
Fraudulent returns might include such things as inflated personal or business deductions, improper deductions, unallowable credits or too many exemptions.
The agency is quick to acknowledge that most tax preparers are honest. But there are some unscrupulous providers out there.
In fiscal 2008, 214 investigations of suspected tax-preparer fraud were initiated, according to the IRS Criminal Investigation Division. There were 142 indictments or criminal informations brought, and 124 tax preparers were sentenced. Those who were convicted or pleaded guilty served an average of 18 months in prison, home confinement, electronic monitoring or a combination.
Among the cases described by the IRS was a North Carolina preparer who was sentenced to 70 months in prison after pleading guilty to charges he conspired to defraud the government by filing false returns and evading his own personal income taxes. He was ordered to pay $6 million in restitution — about the same total as the fraudulent refunds he was charged with claiming for clients.
In addition, the IRS since 2001 has obtained permanent injunctions against more than 365 “abusive tax scheme promoters and abusive return preparers.”
“We're always on the lookout for new schemes,” said Debbie King, deputy director of refund crimes for the IRS Criminal Investigation Division.