As the tax-filing season gets into full swing, many taxpayers turn to paid tax preparers even though there is plenty of free help available.
Choose your tax preparer carefully, federal officials warn. Watch out for fraud, which can occur in your name without you even knowing about it.
A good place to start?
“Avoid those who claim they can obtain larger refunds than others,” Stephen Boyd, special agent for the IRS Criminal Investigation Division in Denver told KUSA-TV this week.
Boyd spoke as tax preparers Austin Ray and Anne Rasamee pleaded guilty to charges stemming from accusations they “doctored” numbers on clients’ tax returns to ensure large refunds. If clients couldn’t pay up-front for the return preparation, Ray and Rasamee would have refunds deposited directly into the account of their firm, Cheapertaxes.
The Department of Justice’s Tax Division and the Internal Revenue Service say they use both civil and criminal enforcement tools to fight tax fraud. The IRS says 204 “abusive return preparers” were sentenced in fiscal year 2015. Recent cases exemplify two major categories of preparer abuse.
1. Boosting refunds
A federal court in Orlando, Florida, issued a preliminary injunction to shut down Jason Stinson, who owns “Nation Tax Services” that operate in storefronts in Alabama, Florida, Georgia and North Carolina. Stinson’s businesses target low-income customers with deceptive and misleading advertisements, and prepare and file fraudulent tax returns to increase their customers’ refunds, officials alleged. The patterns of abuse cited include:
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Falsely claiming the Earned Income Tax Credit
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Fabricating businesses and related business income and expenses
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Fabricating Schedule A (itemized, personal) deductions for unreimbursed employee expenses, charitable deductions, and medical and dental expenses
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Claiming false education credits
Trial for Stinson is scheduled in October.
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A civil complaint filed against Craig M. Comer of Royal Oak, Michigan, and his business, Comer Inc., alleges that his five Liberty Tax Service franchise locations in the Detroit area fraudulently overstate refunds and claim refundable credits by, among other things, claiming false or inflated Schedule C (business) income and expenses, bogus dependents, false filing statuses, improper education credits and false itemized deductions.
Watch the video of ‘Beware the Perils of Crooked Tax Preparers’ on MoneyTalksNews.com.
2. Stolen identification refund fraud
Benita E. Short, a Phenix City, Alabama, resident was sentenced this week to serve 51 months in prison and ordered to pay $116,636 in restitution for her role in a stolen identity refund fraud (SIRF) scheme.