It is the busy season for those who offer tax preparation services. Tax season is starting to finish up and clients are often pushing for the biggest return possible. Providing the service your clients want while meeting the demands and regulations expected by the Internal Revenue Service (IRS) can be difficult. A failure to satisfy the client can mean lost business while a failure to satisfy the IRS can mean jail time if the accused does not have a strong defense to the allegations.
A tax preparation provider out of Hawaii provides a recent example. The tax professional recently pleaded guilty to allegations of tax fraud.
What were the allegations? The charges include allegations that the tax preparation professional deliberately claimed greater deductions than the clients reported. The motivation: a bigger refund for the client.
What were the charges? He was charged with aiding and assisting in the preparation and filing of false tax returns and underreporting his own income.
The charges span from filing years 2006 through 2016.
What are the potential penalties? Aiding and abetting understatement of tax liability can come with a monetary penalty of $1,000 for an individual or $10,000 for a corporation for each violation. The IRS notes the penalty generally applies only once for documents from the same tax payer for a single tax year. Thus penalties can accumulate if the same crime is committed for a number of years.
The accused faces up to three years imprisonment, $250,000 in restitution and a supervised release spanning three years after he is released from prison.