10 Tax Preparers Plead Guilty of IRS Fraud

A scheme to file false tax returns yielded millions of IRS dollars before the tax return preparers involved were caught and convicted. Here’s the scoop:

In an elaborate scheme to file false returns, operators of two tax preparation businesses (Seguros Internacionales and Poz Servicios Para Hispanos) in North Carolina defrauded the IRS of about $13 million between 2006 and 2009. Within these three years, the ten preparers made approximately 10,000 filings of income tax returns that sought more than $22 million in refunds. The IRS paid approximately $13 million of the fraudulently claimed refunds before investigators caught on to the scheme! The two businesses are no longer in operation.

The preparers plead guilty to charges of mail fraud and illegal entry into the U.S. All of them are facing a lengthy prison term of anywhere between 5 and 20 years, and of course, will then be deported to their country of origin after they have served their jail term. It turns out, federal agents arrested even more people in connection with this tax scheme last week—all in all, it is believed that about 20 people were involved.

The IRS has made it clear they are increasing enforcement efforts and are working closely with the Justice Department to increase legal actions against dishonest tax return preparers. The IRS has used investigative measures such as having agents pose as taxpayers to seek out and stop dishonest preparers from filing inaccurate returns. The IRS claims to have conducted 230 undercover visits to various tax return preparers and as a result, dozens of search warrants have been issued.

The IRS is not messing around. The IRS warns it will continue civil and criminal action as appropriate. The increased efforts will ultimately make a difference for taxpayers nationwide and will help protect the many tax professionals who play by the rules.
In January, the IRS has proposed new regulations regarding the registration, testing and continuing education of tax return preparers. You can see the press release here:

Let me end by saying, it is not only the responsibility of the tax preparer but also a responsibility of the taxpayer to choose carefully when hiring a tax professional.

The full article, "10 Illegal Immigrants Plead Guilty of Tax Fraud” can be found here.