The United States Department of Justice (DOJ) continues to crackdown on tax preparation fraud. The government takes the threat so seriously that the Internal Revenue Service (IRS) has listed return preparer fraud as one of its Dirty Dozen Tax Scams.
What is the most recent case? The DOJ recently filed a case against a Texas tax return preparation office. As part of their case, the government filed for and received a permanent injunction against the business. The injunction effectively shut down the office.
The injunction did not end there. It also included a provision that forbids the accused from “owning or operating a tax preparation business.”
Why did the government ask for an injunction? The prosecution has two primary claims:
- False or fraudulent claims for tax credits. The prosecution contends the tax preparation professional made false or fraudulent claims for tax credits. Specifically, the government says the tax preparer lied about the taxpayers’ ability to claim the Earned Income Tax Credit, fuel tax credit and American Opportunity Credit.
- Failure to give clients copies of filings. The federal agency has also stated the professional did not provide copies of returns to her clients or provided copies that were not the same as the ones filed with the IRS.
If the prosecution can support these claims, the accused could face multiple criminal charges.
What can other tax return preparation specialists learn from this case? The government will pursue allegations of tax return preparation fraud. Depending on the evidence gathered, these allegations can result in fines, loss of the business, an inability to ever practice in the profession in the future and potential imprisonment.