The Law Offices of Jeffrey Anton Collins have seen tax return preparer fraud that affected Certified Public Accountants, Enrolled Agents, attorneys in tax practice and all other tax professionals. The Internal Revenue Service is indeed changing its approach, and is taking a very aggressive stand against what it refers to as tax return preparer fraud. Substantial penalties, full repayment of tax, and imprisonment are very real results occurring in Tax Return Preparer Cases.

If the Preparer has been contacted by the United States Department of Justice or the Internal

Revenue Service Criminal Investigation Division, that person may very well be under investigation or under suspicion. That investigation could possibly lead to an allegation – and conviction of tax return preparer fraud.

There are offenses usually associated with return preparer fraud. Most preparer cases fall under Section 7206 of the Internal Revenue Code. More specifically, many cases are brought under violations of Section 7206 (2) – that is, filing a false return made under the penalty of perjury. Also common for preparer fraud cases, there is the U.S. Criminal Code, Title 18 of the United States Code, Section 371. This section defines conspiracy to commit an offense or defraud the United States.

 

HOW A TAX RETURN PREPARER IS INVESTIGATED

Under certain conditions, the Internal Revenue Service will sometimes conduct what is called a “Preparer Examination Project”. Based upon complaints made to IRS, quite often from a CPA’s tax clients under exam, IRS will conduct a series audits against several clients of that return preparer. If IRS finds is a consistent misapplication of the law, or a misstatement of facts on the returns, that lead to a consistent underpayment of tax, a referral to the U.S. Department of Justice (DOJ) could follow for criminal prosecution.

 

COMPLAINTS AGAINST THE PREPARER

Sometimes a CPA’s clients may consider themselves “injured” by the preparer’s work. When a tax return client gets audited, and there is an understatement of tax, often that individual will blame the tax preparer for any misstatement of fact or law on their tax return. Anyone wishing to file grievance may complete a Form 14157, Complaint for Tax Return Preparer. In fact, this Complaint Form 14157 is often completed by the taxpayer during the audit.

Another document; Form 14157-A, is an Affidavit for Tax Preparer Fraud or Misconduct. The affidavit is a detailed statement from the taxpayer about the preparer’s alleged conduct, related to that client’s tax return and underpayment of tax liability.

This complaint process creates supporting evidence against the unknowing CPA or tax return preparer. Attorney Collins therefore insists that any return preparer who believes to have complaining clients, consult and engage an attorney immediately.

 

HAS THE PREPARER BEEN CONTACTED BY IRS OR DOJ

When a preparer is contacted by the Department of Justice or IRS Criminal Investigation Division, it is usually because there already has been substantial evidence has been gathered. The government may even have received a formal complaint by a client, or a sworn statement about that tax return preparer’s conduct.

The Law Offices of Jeffrey Anton Collins caution any preparer contacted by a Special Agent or the U.S. Department of Justice to immediately engage an experienced, knowledgeable attorney.

Understand that the beginning of an investigation, or even worse an indictment for an allegation of criminal tax fraud is something that will not go away by itself. If that happens, it is time to hire an attorney. Be smart – the situation will not go away by itself. Hire a competent, experienced attorney for representation.