Federal Criminal Charges Against Tax Preparers
Many people choose to go to professionals when it comes time to prepare their taxes. While it is natural to trust expert tax preparers, it also comes with a certain level of risk. Tax preparers that that use false information or fraudulent practices when filing clients’ taxes may find themselves at the center of a federal investigation.
Filing False Returns
Most tax preparers that are facing federal criminal charges are being investigated for filing false returns or assisting others with filing false returns. Proving that a tax preparer filed false tax returns can be difficult. To do this, federal prosecutors must prove that the individual knew that some of the statements in the tax returns in question were fraudulent.
A tax preparer that was working with multiple people might use the same type of information on each tax return. For example, if a preparer claimed an exact amount of money on multiple people’s returns, the government will have a better chance of prosecuting the tax preparer. If the information on the tax returns doesn’t make sense and appears fraudulent, it is more likely that the tax preparer will be prosecuted.
If You’re Investigated as a Tax Preparer
Most investigations into tax preparers are conducted by IRS agents from the Criminal Investigating Division.
When an investigation into a tax preparer begins, the government starts by interviewing any of the individual’s former clients. In some cases, tax preparers learn of the investigation into their business from their former clients. The investigation is conducted this way so that the government agents can learn the truth from the clients without the tax preparer’s knowledge. This will help the agents determine whether or not the tax returns were fraudulent.
If you find out that your clients have been speaking to federal agents, now is the time to retain a federal criminal attorney.
Additionally, the agents will use these interviews to determine if the false information was provided by the tax preparer of the client. As they learn more about how the preparer collects their clients’ information, they will be able to better understand who is at fault.
Federal agents often investigate tax prepares that get paid in questionable ways. Tax preparers that have significantly lower fees with a large volume of returns will set off red flags for federal agents. Similarly, tax preparers that ask for a portion of their clients’ refund will also look suspicious, as this is incentive to commit a crime.
Defenses to Criminal Charges Against Tax Preparers
The best defense to use if charged with tax fraud really depends on the specific situation. Tax preparers that are being investigated must contact an attorney as soon as possible.
Defenses to tax fraud:
- Intentional Conduct: This defense is applicable for tax preparers that did not intend to commit fraud.
- Insufficient Evidence: An attorney can use this defense if there is insufficient evidence that the tax prepare committed fraud.
- Statute of Limitations: For investigations involving fraud and tax evasion, there is a limited amount of time in which an individual can be prosecuted.
- Entrapment: This defense can be argued if the government compelled the tax preparer into committing a crime that they wouldn’t have committed otherwise.
- Mistake: This defense can be used if it is clear that the tax preparer made a mistake when filing their clients’ taxes. However, this isn’t easy to prove as the tax preparer is assumed to be a professional in their field.
- Insanity: Insanity may be used as a defense, though it will require you to plead guilty to committing tax fraud.
If you find that the IRS has targeted you in an investigation, it’s time to start building your case. Contact a federal criminal attorney today to make sure you’re properly prepared for the ongoing investigation.