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Federal Tax

DOJ Touts Efforts to Crack Down on Fraudulent Tax Preparers

Tim Shaw  

· 5 minute read

Tim Shaw  

· 5 minute read

The Department of Justice, ahead of Tax Day, advised taxpayers to exercise extreme caution in selecting tax preparers and touted recent successes in catching and stopping fraudulent tax service providers.

According to an April 5 press release, the DOJ warned of too-good-too-be-true offers from “shady” return preppers who over-promise or exaggerate credit and deduction claims on clients’ returns in efforts to rake in fees. Oftentimes, the DOJ said, these bad actors try to collect from customers without attaching identifying preparer information.

“If your preparer asks you to sign a blank return, refuses to sign your return as your return preparer, or is charging you a fee based on the size of your refund, consult the IRS’s website and tips to make sure you are not exposing yourself to trouble,” said Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division.

The DOJ Tax Division coordinates with the U.S. Attorney’s Offices nationwide to convict fraudulent preparers and leverage the court system to recoup “ill-gotten gains.” In the release, the DOJ outlines several cases over the previous 12 months exemplifying its success in the form of year-plus sentences and hundreds of thousands—sometimes millions—in restitutions. Among those convicted include fraudulent prepares who falsify income tax returns; fail to report income from cashed pension checks; include false deductions or fake businesses; preparing taxes in direct violation of a court order; and more.

Additionally, the DOJ listed several civil injunctions obtained by the Tax Division and instances where fraudsters were taken to court to disgorge sums connected to illegal tax prep activities. This comes at a time late into this tax season as the IRS wraps up its annual “Dirty Dozen” list of tax scams identified for 2023, such as those involving claims of the employee retention credit or the fuel tax credit. Other schemes can come in the form of phishing, misleading information on social media, fake charities, third-party account “help,” and more.

“As the Tax Division’s work over the past year demonstrates, our prosecutors have the expertise and resources to identify crooked return preparers and hold them accountable for their criminal conduct,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg, also of the Tax Division.

Since 2015, the IRS, state tax agencies, and industry professionals have worked on the Security Summit, a joint effort to protect taxpayers from scams and identity theft. The Security Summit is broken into six different work groups and meets throughout the year, especially before and after tax season.

Taxpayers concerned about a suspicious tax preparer can submit to the IRS a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and supporting evidence. Also, the IRS Whistleblower Office pays out monetary awards to individuals who provide tips that lead to collections that may have otherwise been missed. Individuals submitting a whistleblower claim should use Form 211, Application for Award for Original Information.

“Scammers are coming up with new ways all the time to try to steal information from taxpayers,” said IRS Commissioner Danny Werfel. “People should be wary and avoid sharing sensitive personal data over the phone, email or social media to avoid getting caught up in these scams. And people should always remember to be wary if a tax deal sounds too good to be true.”


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