As tax season heats up, the Department of Justice (DOJ) has issued a warning to taxpayers to beware of unscrupulous tax return preparers. Specifically, the DOJ is reminding taxpayers to remain wary of tax preparers who claim they can obtain larger refunds than other tax preparers, or who engage in dishonest practices.
“Fraudulent tax return preparers harm taxpayers, legitimate businesses, and the American public,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman. “The Justice Department is committed to working with our partners at the Internal Revenue Service to protect the law-abiding American public and the treasury by stopping this fraud.”
The Tax Division is just one of the arms of the DOJ. The division’s mission is “to enforce the nation’s tax laws fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system, and promote the sound development of the law.” To carry out their mission, the Tax Division employs more than 350 attorneys who can, among other things, assist in bringing civil and criminal actions against dishonest tax return preparers.
Even though we’re just a few weeks into 2019, the DOJ has already obtained a number of orders barring individuals from filing tax returns for others, including:
- On January 4, 2019, a federal court in Indiana permanently enjoined Antonio Chappell and G & A Tax Service LLC from preparing federal tax returns for others. The court noted that the defendants had prepared tax returns with a wide range of scams, including falsifying reported income or losses to wrongfully increase or claim the Earned Income Tax Credit (EITC); fabricating education expenses to obtain the American Opportunity Credit (AOC) for certain educational expenses; misrepresenting a taxpayer’s filing status; and reporting non-qualifying dependents to take advantage of the Additional Child Tax Credit (ACTC).
- On January 7, 2019, a federal court in Florida entered a preliminary injunction barring Erotida Harden, Michael Harden, Aida Cortes, Yahaira Claudio, Tamika Robenson, Natasha Williams, and Certified Taxes LLC from acting as tax return preparers. They were also directed by the court to immediately close all tax-return-preparation stores that they currently own directly or through any entity and not to reopen them without a court order.
You can find a list of individuals who are barred from preparing tax returns and promoting tax schemes on the DOJ’s website here.
The Tax Division also brings criminal action against fraudulent tax preparers. Examples of some recent criminal convictions obtained by the Tax Division include:
- On January 28, 2019, a Minneapolis-based tax return preparer was sentenced to serve 121 months in prison for managing and directing a fraudulent return-preparation business that prepared tax returns reporting false dependents, fake business income and losses, incorrect deductions and credits, and false filing statuses, to get customers inflated tax refunds.
- On November 14, 2018, a Las Vegas, Nevada, tax return preparer was sentenced to 37 months in prison for aiding and assisting in the filing of false tax returns that included multiple false items like bogus charitable contributions and inappropriate unreimbursed employee expenses such as business meals and transportation expenses.
- On September 13, 2018, a resident of Winton-Salem, North Carolina (who was also licensed as an attorney in Georgia), was sentenced to 13 months in prison for aiding and assisting in the preparation of fraudulent tax returns.
It’s important to remember that even though the DOJ is working to shut down these tax preparers, you are ultimately responsible for what gets reported on your tax return. When you sign the return, you are confirming the details with this statement:
Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.
With that in mind, never sign a blank tax form.
If the IRS determines that your tax return contains false or fraudulent statements, you typically have to repay the tax due in addition to penalties and interest. You can also be criminally prosecuted.
If you need to report a tax preparer, you can find out how here.
For information on how to find a reputable tax preparer, including an explanation of taxpayer credentials, click here.
