A Lack of Knowledge is No Excuse when Tax Preparers Engage in Fraud on Your Tax Return

With a U.S. tax code estimated at about four million words in 2012, it is no wonder that many individuals hire professional tax preparers to help accurately file their annual returns while obtaining the smallest possible tax obligation. However, not all tax preparers operate within the law ― potentially exposing taxpayers to legal issues down the road. You can help protect yourself from unexpected future tax payments or even potential federal charges of tax fraud by taking a common sense approach to the preparation of your annual tax return.

The IRS cited tax preparer fraud as one of the top tax scams in 2013, and they aggressively seek out offenders. As recently as June 2013, a Miami federal court permanently barred a tax preparer from preparing federal returns for others. According to a news release issued by The United States Department of Justice, the preparer allegedly fabricated deductions and credits in an attempt to understate his customers’ tax liabilities or inflate his customers’ refunds. Unfortunately, 94 percent of his customers are still legally responsible for paying additional taxes.

Your federal tax returns are among the most important documents you complete in any given year. Even if someone else prepares your return, you need to take certain precautions, such as the following:

• Seek out tax preparers based on recommendations by trusted individuals, or look for preparers accredited by the Better Business Bureau.
• Avoid preparers who claim they can get substantially higher refunds.
• Do not sign your return or allow a preparer to mail it without conducting your own review to ensure income and deductions are accurately represented.

At the very least, an IRS discovery of a fraudulently-prepared return requires you to pay back taxes, potentially including interest charges and penalties. However, you can also face criminal investigation for tax evasion. If you suspect you are under investigation by the IRS, seek immediate advice from an experienced federal white collar crime defense attorney to learn your next steps.