Tax Refund 2023: IRS Warns To Be On The Lookout For Crooked Tax Preparers

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The IRS has warned taxpayers to be on the lookout for tax preparers who could promise you the moon when it comes to tax refunds but instead send you to prison. The tax season is the ripe time for fraudsters and swindlers to pop up, posing as tax professionals. 

These phony professionals crop up around the time the income tax return dates are announced and promise large tax refunds and rebates to unsuspecting filers. And if you forget to beware of these scammers in your urgency to file your income tax returns this year, you could be in serious trouble that could even land you in prison. 

Scammers posing as tax preparers will lure you with the promise of big refunds. Be careful as you will be online to instead end up paying way more than the scammers promised to earn. The IRS will get to you someday later or sooner and will force you to return the tax refund amount. The agency will also fine you and add penalties when finally they realize that your income tax return is botched

Such tax scammers are frequently busted by the Department of Justice. But by the time they are detected, they usually end up costing way more than if you had paid the correct share of the tax and collected the correct tax refund check. 

Texas Man And North Carolina Woman End Up In Prison After Paying A Fortune Instead Of Collecting A Tax Refund

In a recent instance, a tax preparer in Texas pleaded guilty after being detected filing doctored tax returns and aggravated theft of identity. It ended up costing him a tax loss of $397,367. The resident of Killeen pleaded guilty to aiding and abetting in the preparation and submission of a false return. He also admitted to aggravated identity theft, the Deputy Assitant Attorney of the tax division of the Dept. of Justice announced. 

Court documents revealed that Sherman Marshall devised a scheme to submit false federal income tax returns on behalf of his client. He admitted that he prepared false documents specifying items on the income tax return of his clients. This helped them fraudulently increase their tax refund amount. He also admitted that he instructed and guided clients’ refunds to be deposited in financial accounts controlled by him. 

Unknown to his numerous clients, Marshall then stole a part of the tax refunds. Marshall also opened false financial accounts in the name of his clients to receive substantial tax refund checks in the name of his clients. This was done by keeping his clients totally in the dark. In his final submission, Marshall admitted that his actions had led to a loss of $397,367 to the tax authorities. 

Marshall has been slapped with a maximum statutory penalty that will send him to a maximum of three years in prison for aiding and abetting the fraud. In addition, he faces a 2-year mandatory period of sentence for aggravated theft of identity. On top of these five years, he faces a period of being under supervision after his release. On top of this, there are periods of restitution and also monetary penalties.

In a separate case, a woman in North Carolina went to prison after she was found guilty of preparing false income tax returns that increased the tax refund amount of her clients. The total amount of loss that her fraudulent actions were over $600,000.

Such instances released by the IRS serve as cautionary instances for filers. Melanie Lauridsen of the American Institute of Certified Public Accountants says that while there is a motivation and incentive to cut corners and not pay what you owe to the government, in the long run, it proves dangerous and could earn you prison time. 

Signs That The Tax Refund Check You Earned Was Done Through Fraudulent Means

The first warning sign is the general profile of a scammer posing as a tax preparer. They are generally very personable and charming to a fault and will come up with polished presentations. They can be an individual or a firm and will try to convince you to work for a percentage of the tax refund they will deliver. 

Such preparers will claim that the scheme they are presenting to you has been approved by the IRS. In support of this claim, they will submit recommendation letters from professionals though all these letters and claims are false and made up. Finally, they will try to convince you in one sitting and discourage you from seeing a second opinion and keep you from contacting the IRS directly. 

If you realize that your tax preparer is offering a bargain that seems too good to be true, it usually is. If the tax refund that you are promised is unusually or uncharacteristically large, it should immediately warn you about the questionable practice being used. At the end of the day you have to remember that even if your tax return is being prepared by a tax preparer, you are ultimately responsible for all the information added in the return. 

The latest fraudulent schemes that are out there on social media include one that encourages filers to claim fraudulent tax refund payments by including phony W-2s along with their income tax return. This was recently revealed by the IRS, which is investigating the matter. 

Scam sites are advising filers to include fictitious income and show substantial holdings. Entering such high figures into tax-filing software can generate large tax refund checks. But they can be subject to scrutiny by the IRS, and then it could mean a long run-in with the tax authorities that could even mean a prison term at the end. 

through increased audits of tax preparers, improvements in information gathering, and letting filers know about how to recognize such fraudulent schemes, the IRS continues to pin down and shut down such tax schemes. 

Those participating in such schemes and those who promote them have to face serious consequences at the end which include court fines, penalties, and even time in prison. Further, assesses could end up paying additional taxes other than the regular tax and fine already paid.