Corrupt Tax Preparer

I recently read a story about a corrupt tax preparer who was charged with many counts of making false claims for tax refunds, aggravated identity theft and stealing government money. She apparently used the names and Social Security Numbers of individuals to steal tax refunds from the IRS and also collected thousands of dollars in fraudulent tax refunds from the IRS. Then I decided to research a little more about criminal tax fraud cases and came across an even more interesting case which was about a partnership tax business with a variety of deceptive practices and schemes to claim more than $28 million in refunds. These included using stolen identities of deceased children to falsely claim them as dependents on clients' returns, claiming "business losses" from fictitious businesses, claiming as deductions thousands of dollars in non-existent charitable contributions and miscellaneous job expenses, falsely claiming credits for education expenses, and falsely claiming credits for child-care expenses. Apparently, each corrupt tax preparer in the business earned inflated commissions and fees related to the fraudulent refunds they generated for their clients.

During the tax season, it is important to be extra diligent to avoid falling into a corrupt tax preparer trap. Some of them may abuse your personal information and others may offer a bunch of write offs in order to shine. But the truth about write offs is that anyone can claim a bunch of deductions until the IRS starts questioning the legitimacy of the write offs and requesting receipts and explanations for the questionable transactions.

When using a personal service provider such as an accountant or tax expert, it is important to find out a little about the person you plan to engage for his or her tax services. Some of us prepare our own tax returns and others have been using the same tax preparer for a long time. If you have a long term and trustworthy relationship with a tax preparer, that’s great but if you plan to engage a new tax preparer, be cautious and do a little background check by asking for references or asking friends for referrals.

People often ask if a CPA is better and more trustworthy than non-certified tax preparers and accountants. I have personally known tax prepares without a professional certification such as a CPA who were extremely knowledgeable about tax laws, provided great services and had gained the trust of thousands of clients. When we consider the motives or rational, incentive or justification, and opportunity of a tax preparer for committing fraud, most of them have the opportunity to commit fraud since they have access to the personal information of their clients, however, the certified tax experts and those who have successful tax and accounting businesses have less of an incentive for committing fraud. CPAs and successful tax business owners will not jeopardize their businesses and risk the loss of their professional certification for merely a few thousand dollars in fraud money, unless of course the fraud involves millions of dollars or even reasonably more than their income from the tax business which can then provide them the incentive for turning into a corrupt tax preparer.

When selecting a tax expert, use your judgment and consider the person’s background, number of clients, years in business, client complaints posted on the Internet and references. Such information will provide you with clues about whether the person provides good services and has any motive or incentive for being a corrupt tax preparer.

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