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Tax fraud and professional preparers: a Florida case

Taxpayers and their professional tax preparers have what is in many ways a peculiar relationship. Many taxpayers are very dependent on both the expertise and the integrity of their tax preparers. If the preparers turn out to be lacking in integrity, it can create all sorts of problems.

The IRS seems to be aware of this. That's why the agency is increasing its regulation of professional tax preparers. The new rules include mandatory registration of paid tax preparers, as well as competency test is to be taken by the end of next year.

In a recent case in South Florida, a federal court took action to permanently bar a Broward County man from preparing federal tax returns for other people. The U.S. Justice Department announced the step by the court in Fort Lauderdale today.

Last month, the man pleaded guilty to criminal charges involving conspiracy to defraud the government. He has consented to the court's injunction barring him from preparing other people's federal tax returns.

The Broward County man's case involved identity theft. Stolen identities were used to submit tax returns aimed at obtaining refunds through fraud. In September, the Treasury Department's inspector general for tax administration (TIGTA) asserted that Florida's rate of tax refund fraud using identity theft is the highest in the nation.

Not all cases of alleged tax fraud are as clear, however, as this case apparently was. There can be a lot of ambiguity in the interpretation of tax law. Taxpayers tend to depend on their tax advisers and paid preparers to help them make sense of it all. This does not necessarily mean, however, that a given taxpayer has empowered his or her preparer to take wrongful action.

Source: "Broward County Man Permanently Barred from Preparing Federal Tax Returns," LoanSafe.org., 11-16-12

Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our Florida criminal tax fraud page.