Tax preparer sentenced to 4 years for millions in tax fraud

On Behalf of | Oct 1, 2014 | Tax Crimes

A frequent complaint about American tax codes is that they are too complicated for the average person to understand. This is why so many Americans choose to hire a professional or company to prepare their tax returns. Working with a professional saves time and often helps shield against mistakes that could lead to an IRS audit.

That being said, you need to be careful who you hire to handle your taxes. This is the lesson that hundreds or even thousands of people learned earlier this month when the owner of one tax preparation service was sentenced after being convicted of tax fraud.

The Atlanta-based company headed by a 50-year-old woman reportedly “prepared and electronically filed thousands of Form 1045 individual income tax returns with the IRS” over a five-year period. During that time, she “intentionally misstated her clients’ income in order to generate fraudulent returns” and “made up fake side businesses with fake income and fake expenses. This had the effect of off-setting her clients’ income tax liability from their real salaries.”

Authorities believe the woman’s fraudulent returns amounted to approximately $7 million in lost revenue. She will now spend four years and three months in federal prison and has been ordered to pay nearly $6 million in restitution to the U.S. Treasury.

Considering how many returns she handled, it seems unlikely that the woman was committing tax fraud at the request of her clients. Most clients probably had no idea what was going on. Hopefully, no innocent clients have been implicated in this scandal.

Whether you prepare tax returns personally or whether you hire someone to do it for you, an audit or allegations of fraud must not be taken lightly. If you are in such a situation, you may want to contact an experienced tax law attorney right away.

Source: The Atlanta Journal-Constitution, “Atlanta tax preparer sentenced to 4 years for tax fraud,” Mike Morris, Sept. 26, 2014