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Tim Smith
Tim Smith
Attorney • 231-946-0700

The IRS warns of Tax Preparer Fraud

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It’s that time of year. We start gathering our tax documents and sharpening our pencils as we hope for the best. For those that use a tax preparer, be advied: the IRS is already issuing warnings.

The main warning is more of a reminder that the individual, not the tax preparer is responsible if a fraudulent return is submitted under their name.

What does this mean? It means penalties and interest will be owed by the individual, even if they had no idea that their tax preparer committed fraud.

The IRS is quick to point out that most tax preparers are honest, but for those that aren’t, why would they do this? I’m not sure, but a fat refund means a fat bill to the client. If the refund was obtained through a fraudulent return, you have problems.

According to the IRS Criminal Investigation Division, in 2008, there were 214 investigations of what was thought to be tax preparer fraud. This brought about 142 indictments and 124 of the tax preparers were convicted and sentenced.

Jail Time? You bet. An average of 18 months.

So what is a consumer to do when they find out their tax preparer has committed fraud and now they are on the hook for return of their refund, and penalties and interest? Well, you need to deal with the IRS immediately. You owe it and there is no way around it. You’ll need to work out a payment plan of sort with the IRS and, in the meantime, put the tax preparer and his/her firm on notice of your claim. Even though you have to pay the IRS what is owed, you should be able to get reimbursed from the tax-preparer and/or his office.

Click here for some tips from the IRS on selecting a tax preparer