Criminal Defense Lawyers

My Accountant Filed False Tax Returns In My Name – Am I In Trouble With The IRS

You just discovered something that makes your stomach drop. Your accountant – the professional you trusted to handle your taxes – filed false returns in your name. Maybe they claimed deductions you didn’t have. Maybe they invented business expenses. Maybe they created phantom income or credits you never qualified for. You had no idea until now. And your first thought is: I’m the victim here. The accountant committed fraud. I shouldn’t be in trouble. But here’s what the IRS is going to tell you: you signed those returns. Your signature made them YOUR returns. And that signature may have just put you in the crosshairs of a criminal tax investigation.

Here’s what nobody tells you about accountant fraud: the taxpayer is almost always responsible for the contents of their tax returns, regardless of who prepared them. When the IRS discovers false information on a return, they don’t care that a professional prepared it. They care that you signed it. Your signature was a declaration under penalty of perjury that the return was true, correct, and complete. The accountant’s fraud doesn’t automatically become your defense – it becomes your problem.

And here’s the uncomfortable truth that should terrify anyone in this situation: the IRS uses statistical pattern analysis to identify fraudulent tax preparers. When they flag a preparer, they don’t just audit that preparer – they audit that preparer’s clients. All of them. If your accountant was running a fraud scheme across dozens or hundreds of clients, you’re about to be swept into an investigation that has nothing to do with anything you personally did. The preparer’s other victims become evidence of a pattern, and you become part of that pattern.

The Signature That Changed Everything

Let me explain exactly why your signature matters so much, becuase this is were most people’s hopes of escaping liability collapse.

When you signed your tax return, you signed a declaration. The signature line on Form 1040 says: “Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.” You signed that. Even if you didnt read the return carefully. Even if you trusted your accountant completly. Even if you had no idea what deductions they were claiming. Your signature made a legal declaration about the contents.

Heres the thing about that declaration. “To the best of my knowledge and belief” provides some protection if you genuinly didnt know the return contained false information. But the IRS will ask: how could you not know?

• Did you review the return before signing?
• Did you question deductions that seemed too good?
• Did you notice your refund was much larger then expected?

If there were obvious red flags and you ignored them, your “lack of knowledge” starts looking like willful blindness – and willful blindness can establish criminal intent.

The IRS expects taxpayers to review returns before signing. Not just glance at them – actualy review them. Understand what deductions are being claimed. Know were the numbers come from. Ask questions when something looks wrong. If you signed without reviewing, you dont get to claim ignorance when the fraud is discovered. You get asked why you signed a document you didnt read.

Think about what this means for your defense. You cant simply say “my accountant did it.” You have to explain why you signed a return containing false information. You have to explain why you didnt notice. You have to demonstrate that you were genuinly deceived rather then willfully blind. This is a much harder position then “I’m a victim.”

How The IRS Discovers Preparer Fraud – And Why It Sweeps Up Clients

Understanding how the IRS detects fraudulent preparers helps you grasp why you’ve been dragged into this investigation.

The IRS uses sophisticated statistical analysis to identify tax preparers with suspicious filing patterns. They look at all returns filed by a particular preparer and analyze them for anomolies:

• Do this preparers clients claim unusualy high deductions compared to similar taxpayers?
• Do an unusual percentage of there clients recieve refunds?
• Are there patterns of specific deductions – home office, business expenses, education credits – that appear across multiple unrelated clients?

When the analysis flags a preparer, the IRS can pull all returns that preparer filed. Every client. Every year. The investigation isnt about you specifically – its about the preparer. But to investigate the preparer, they have to examine the preparer’s work. Which means examining your returns.

Heres whats particuarly dangerous about this process. Evidence from other clients strengthens the case against the preparer – and against you. If the IRS finds that your accountant filed false returns for fifty other clients, thats evidence of a scheme. And if your return fits the same pattern as those other false returns, the IRS will argue you were part of that scheme. The other victims’ returns become evidence that implicates you.

Some preparers are caught through client complaints. Other clients who discovered fraud reported it. Those complaints triggered investigations. Now the IRS is looking at everyone that preparer touched. You might never have known anything was wrong if another client hadnt blown the whistle.

The Criminal Exposure You Didnt Know You Had

Let me be clear about the criminal stakes your facing, becuase many people dont realize that tax preparer fraud can result in criminal charges against the client.

Tax crimes require willfulness – the intentional violation of a known legal duty. If you genuinly didnt know your accountant was filing false returns, you may lack the required mental state for criminal prosecution. But “willful blindness” – deliberately avoiding knowledge of wrongdoing – can satisfy the willfulness requirement. If you should have known, if the signs were obvious, if you chose not to look closely – prosecutors can argue you were willfully blind.

Section 7201 of the Internal Revenue Code – the tax evasion statute – allows prosecution of “any person” who attempts to evade or defeat taxes. That includes people who help others evade taxes. The defendant “need not be the taxpayer in question.” If prosecutors can show you participated in your accountants scheme – even passively, by providing information you knew would be used fraudulently – you face criminal exposure.

IRS Criminal Investigation has a ninety percent federal conviction rate. Thats not a typo. When IRS-CI refers a case for prosecution, the defendant is convicted nine times out of ten. They achieve this by being extremly selective about which cases they bring. If you’ve become a target of IRS-CI, someone has already evaluated the evidence and decided its strong enough to win.

The penalties for tax crimes are severe:

• Aiding in the preparation of false returns carries up to three years in prison per count
• Tax evasion carries up to five years
• Multiple years of false returns mean multiple counts
• A defendant convicted on ten counts of filing false returns faces up to thirty years of sentencing exposure

Real Cases That Show What Happens

Let me give you concrete examples of preparer fraud prosecutions, becuase understanding real outcomes helps you grasp the stakes.

Eunice Salley was a Chicago tax preparer who filed false returns on behalf of her clients seeking more then one million dollars in fraudulent refunds. She was sentenced to seven years in federal prison. Seven years. Not a fine. Not probation. Prison.

King Isaac Umoren was a Las Vegas tax preparer who prepared returns with false deductions and fictitious businesses to generate larger refunds. He was sentenced to thirteen years and three months in federal prison and ordered to pay nearly ten million dollars in restitution. Thirteen years becuase he helped people get refunds they didnt deserve.

In both cases, the preparers went to prison – but the clients werent off the hook. The clients still owed all the back taxes. Plus interest. Plus penalties. Plus the time and expense of dealing with audits, investigations, and proving they were victims rather then participants.

Heres what should concern you. In some cases, clients are prosecuted alongside preparers. When prosecutors believe the client knew about the fraud, when there evidence of kickbacks or conspiracy, the client faces criminal charges too. Being a “victim” of your accountant dosent automaticaly protect you from prosecution.

The Kickback Problem That Makes Everything Worse

If you recieved any money from your accountant related to your inflated refunds, your situation just became dramaticaly worse.

Kickbacks between taxpayers and preparers are common triggers for criminal investigations. Heres how it works:

• The preparer inflates your refund through false deductions
• You recieve a larger refund then your entitled to
• The preparer takes a cut – either as an inflated preparation fee or as a direct payment from you
• Both parties profit from the fraud. Both parties face criminal liability.

The IRS looks specifically for kickback arrangements. When they investigate fraudulent preparers, they examine how clients paid there fees:

• Did the fee come out of the refund?
• Was the fee unusualy high?
• Did clients make payments to the preparer outside the normal billing arrangement?

Any evidence of kickbacks transforms you from potential victim to definite participant.

Even if there was no explicit kickback, you recieved the benefit of inflated refunds. The IRS can argue you knew something was wrong when your refund was larger then expected. Why didnt you question it? Why didnt you investigate? The fact that you cashed those checks while staying silent about the suspicious amounts suggests you were in on the scheme.

What You Should Have Noticed – And Why It Matters

Looking back, there were probly warning signs you missed. Understanding those signs matters becuase the IRS will ask why you didnt act on them.

Your refund was larger then you expected or larger then previous years. When someone who understands your financial situation files your taxes and produces a much bigger refund, thats a red flag. Did you ask why? Did you question what changed?

The return claimed deductions you didnt have documentation for. Business expenses you didnt incur. Charitable donations you didnt make. Home office deductions when you dont work from home. If you reviewed the return – as your supposed to before signing – these should have stood out.

Your accountant was vague about how they achieved the results. Good accountants explain there work. They tell you what deductions they found, why you qualify, how the numbers were calculated. If your accountant produced great results but couldnt or wouldnt explain them, that was suspicious.

The accountant discouraged you from reviewing the return carefully. “Just sign here, its all correct.” “You dont need to read through all that.” “Trust me, I’m a professional.” These statements should have been warnings that something was wrong.

Other clients of this accountant mentioned similar experiences. Word gets around. If friends or associates who use the same preparer also got surprisingly large refunds, thats a pattern that should have concerned you.

The “I Didnt Know” Defense And Its Limits

Lets address the defense your probably planning to assert: you didnt know the returns were false. You trusted a professional. Your a victim.

This defense can work – but its harder then you think. The IRS will examine exactly what you knew, what you should have known, and what you willfully avoided knowing.

You have to demonstrate genuine ignorance. Not just say it – demonstrate it:

• Show that you provided accurate information to your accountant
• Show that you reviewed returns and the false items werent obvious
• Show that you had no reason to suspect fraud
• Show that you recieved no unusual benefit that should have triggered suspicion

The IRS will look at your sophistication. A doctor or lawyer or business owner is expected to understand tax returns better then someone with a simple financial situation. The more sophisticated you are, the less credible your ignorance claim becomes.

They’ll examine your relationship with the preparer. Did you choose this preparer becuase they promised aggressive results? Did you seek them out based on reputation for getting big refunds? The circumstances of how you came to use this accountant matter.

Even if you establish genuine ignorance of the criminal fraud, you still owe the taxes. The civil liability doesnt go away becuase you were deceived. At best, you might avoid criminal prosecution and penalties while still paying everything you should have paid originally plus interest.

What To Do The Moment You Discover The Fraud

If youve just learned your accountant filed false returns, immediate actions matter.

Do not destroy any documents. Everything you have related to your taxes – returns, correspondence, receipts, communications with the accountant – preserve all of it. Destroying documents when you know theres a problem is obstruction of justice.

Gather evidence of what you provided to the accountant. If you can show you gave the accountant accurate information and they falsified it, that supports your defense. Emails, worksheets, documents you sent – all of it matters.

Consult a criminal tax attorney immediately. Not a regular accountant. Not a tax preparer. Not your buddy who does taxes on the side. You need an attorney experienced in IRS criminal investigations who can evaluate your exposure and advise on strategy.

Consider whether to file amended returns. This is a complex decision that depends on many factors. Amended returns can limit your liability – or they can draw attention to problems the IRS might not have found. Your attorney needs to advise on this based on your specific situation.

Document your lack of knowledge. If you genuinly didnt know about the fraud, create a contemporanious record of what you knew and when you learned about the problems. This documentation could be crucial later.

Cooperating Against Your Accountant

One path to limiting your exposure is cooperating with the IRS investigation of your accountant. But this path has risks and complications.

If you provide information that helps prosecute the preparer, the IRS may treat you more favorably. Your cooperation demonstrates good faith. It shows your on the side of the government rather then part of the scheme. Prosecutors have discretion to reward cooperation.

But cooperation dosent guarantee immunity. The IRS might take your information and still prosecute you. They might use what you tell them to build a case against you. Cooperation should happen through an attorney who can negotiate terms and protections.

Any cooperation must be truthful. If you lie to investigators during cooperation, your making things much worse. False statements to federal agents are seperate crimes under 18 USC 1001. Lying while trying to help yourself destroys any benefit from cooperation.

The decision to cooperate involves complex trade-offs. Your attorney needs to evaluate your exposure, the strength of your defenses, and the potential benefits of cooperation before advising you on this path.

The Amended Return Question

One of the most difficult decisions youll face is wheather to file amended returns correcting the fraud. This seems like an obvious good-faith gesture, but its more complicated then it appears.

Filing amended returns has potential benefits:

• It demonstrates you recognized the problem and tried to fix it
• It stops the accrual of additional penalties and interest on the understated amount
• It shows cooperation with the tax system
• Prosecutors may view voluntary correction more favorably then waiting to be caught

But amended returns also have risks:

• You are essentialy confessing that prior returns were false
• The amended returns create a paper trail documenting exactly what was wrong
• If the IRS hadnt yet discovered the specific problems, your amended returns point them directly to the fraud
• You could be drawing attention to issues that might otherwise have gone unnoticed

The timing matters enormously. Amended returns filed before the IRS contacts you look like genuine correction. Amended returns filed after audit notices look like damage control. The voluntary disclosure programs that offer better treatment require disclosure before investigation begins – once the IRS has started looking, you lose access to the most favorable resolution paths.

Never file amended returns without consulting a criminal tax attorney first. The decision involves evaluating wheather the IRS already knows about the problems, wheather amended returns help or hurt your position, and wheather voluntary disclosure programs are available. Getting this wrong can make your situation significanly worse.

Your attorney may recommend a voluntary disclosure through the IRS’s formal programs. These programs offer reduced penalties and sometimes immunity from criminal prosecution in exchange for full disclosure and payment. But the programs have strict requirements, and eligibility depends on factors including wheather the IRS has already started investigating. Once investigation begins, these options close.

The Bottom Line On Accountant Fraud

Your accountant filed false tax returns in your name. This is serious – potentialy criminal serious. The fact that a professional committed the fraud dosent automatically make you innocent. Your signature on those returns created legal obligations and potential liability.

You need to understand several uncomfortable realities:

• You are responsible for the contents of returns you signed
• “I didnt know” is a difficult defense that requires real evidence
• The IRS investigates preparers by investigating there clients – meaning you
• Civil liability for back taxes exists even if you escape criminal prosecution

Get a criminal tax attorney immediately. Not tomorrow. Not after you figure things out. Now. The investigation is already underway. Your accountants other clients are being examined. Your returns are being scrutinized. You need professional guidance before you make statements or take actions that worsen your position.

Your accountant’s fraud has created a crisis in your life. How you respond to that crisis – starting right now – will determine wheather this becomes a civil tax problem you survive or a criminal prosecution that destroys you.