When it comes to tax fraud for those who get caught, which most do, the charges are far from a slap on the wrist. That’s why it is in your best interest to hire a tax professional who is subject to the stringent ethics standards of Treasury Department Circular 230, which includes: enrolled agents (our owner), certified public accountants, and attorneys.
Back to the story at hand, five people from around the country were recently charged with committing wire fraud and identity theft, which resulted in the IRS paying out approximately $10 million in fraudulent tax refunds. They filed tax returns and opened false bank accounts under the stolen identities as sources to receive the refunds. All the identities were stolen from the internet. They actually attempted to file fraudulent tax returns resulting in $21 million in tax refunds, but only $10 million went through.
The defendants’ prison sentences range from 20 years to 38 years so it is clear the court system sees these types of fraud as no laughing matter. They also each face a maximum fine of $250 thousand or twice what they potentially stole from the victims. Due to the magnitude of the grand scheme, the IRS also had to work together with the FBI in order to completely unravel what was going on.
Here are some tips to take away from this:
- If you pay someone to prepare your taxes, hire someone you can trust and that is licensed. A licensed tax professional is subject to strict ethics standards and guaranteed to be more knowledge when it comes to tax laws due to the tests they had to pass to become licensed and the yearly continuing education they are subject to.
- If whoever is preparing your taxes tells you the preparation fees can be deposited into their personal bank account and the rest can go into yours, find someone else to prepare your taxes. We are strictly not allowed to do that and can face a penalty of $500 per offense. However, this should not be confused with bank products that some tax preparation offices offer. These products involve first depositing the full refund(s) into a third party bank then separating out the funds from there, which is 100% legal.
- Be careful when it comes to your identity. There is essentially no privacy anymore when it comes to the internet so be careful where you put your personal information that might put you at risk for identity theft.
As always, thank you to those taking the time to read our latest post and feel free to read more about the case here –