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.
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.
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.