Beware the Perils of Crooked Tax Preparers

Photo (cc) by Philip Taylor PT

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:

  • Falsely claiming the Earned Income Tax Credit
  • Fabricating businesses and related business income and expenses
  • Fabricating Schedule A (itemized, personal) deductions for unreimbursed employee expenses, charitable deductions, and medical and dental expenses
  • Claiming false education credits

Trial for Stinson is scheduled in October.

Click here and learn to slash your taxes with our new tax course!

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.

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.

Short obtained personal identifiable information, including names, Social Security numbers, addresses and dates of birth, without the individuals’ authorization, officials charged. Short got the personal details from a co-conspirator who had access to Alabama state databases and obtained Electronic Filing Identification Numbers (EFINs) in the names of several tax preparation businesses. Short then used the stolen identities and EFINs to electronically file 326 fraudulent tax returns with the IRS, causing a tax loss of $456,853, officials said. Tax refund checks issued for the fraudulent tax returns were cashed at businesses in Alabama and Georgia. In March 2015, officials say, Short co-conspirator Keshia Lanier, the ringleader of a $24 million SIRF conspiracy, also pleaded guilty to one count of wire fraud and one count of aggravated identity theft and was sentenced to 15 years in prison ordered to forfeit $5,811,406.

Roland Alexis, 34, and co-conspirator Jim Joseph, 31, both of Miami, Florida, were sentenced in January to 42 months in prison after, officials charged, they conspired to file more than 860 false income tax returns using stolen identities, mainly those of prisoners and deceased individuals, to claim more than $1 million in refunds from the IRS. The two also were ordered to pay restitution.

Cheryl Singleton, 28, owner of Advanced Tax Services in the Atlanta area, was indicted this week after allegedly participating in a scheme in which officials say she falsely advised customers that they could apply for a government stimulus payment by providing her business with their personal identification information. Singleton and others in the scheme are accused of using the information to electronically file false income tax returns in those individuals’ names without their knowledge or consent. These tax returns each claimed fraudulent tax refunds of at least $1,000, officials said.

“Identity theft and filing false tax returns are serious crimes that inflict tremendous damage on innocent victims,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

In short, save yourself the heartache of a tax-time rip-off. Check out the IRS tips for choosing a preparer here and our advice on getting the tax help you need at the right price here.

Have you ever encountered a shady tax preparer who made promises that were too good to be true? Share your experiences with us in comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
9 Free Things That Used to Cost Us Money
9 Free Things That Used to Cost Us Money

Not everything is getting more expensive.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Generic products are a great way to save money, but sometimes the brand-name version is clearly superior.

This Is the Best Time of Day to Take Blood Pressure Meds
This Is the Best Time of Day to Take Blood Pressure Meds

The right timing can help you prevent a big — and possibly fatal — mistake.

7 Reasons to Carry Mortgage Debt Into Retirement
7 Reasons to Carry Mortgage Debt Into Retirement

It often makes financial sense to not pay off your mortgage before retiring.

3 Ways to Get Paid for Searching the Web
3 Ways to Get Paid for Searching the Web

If you’re already doing it anyway, why not get rewarded for it? Here are three great opportunities.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

10 Cars You Are Most Likely to Keep for 15 Years
10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

9 Things You Should Never Leave in a Car
9 Things You Should Never Leave in a Car

Thinking of leaving these possessions in a car? Prepare for unexpected consequences.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

9 Mistakes People Make When Cleaning With Vinegar
9 Mistakes People Make When Cleaning With Vinegar

Cleaning with vinegar can save you a lot of money, but using it like this can cost you.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things Successful Retirees Do Differently
10 Things Successful Retirees Do Differently

These habits and characteristics can help put you on the track to success.

7 Costly Health Problems That Strike After Age 50
7 Costly Health Problems That Strike After Age 50

As we age, our bodies wear down. Here is how to cut costs associated with some common ailments.

29 Purchases That Can Save You Money Every Day
29 Purchases That Can Save You Money Every Day

Sometimes, you’ve got to spend to save.

7 Things I Never Buy at Costco
7 Things I Never Buy at Costco

A bulk buy isn’t always the best buy.

5 Tax Mistakes to Avoid in Retirement
5 Tax Mistakes to Avoid in Retirement

Even great savers can reduce their retirement income by making these mistakes.

Will You Owe Taxes on Last Year’s Stimulus Payments?
Will You Owe Taxes on Last Year’s Stimulus Payments?

It’s the question on everyone’s lips this tax season.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.