Tax return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams, and the government continues in its efforts to eradicate it as such. On September 7, 2022, Assistant Attorney General David A. Hubbert advised “taxpayers seeking a return preparer should remain vigilant.” The caution followed the United States’ filing of a complaint in the U.S. District Court for the Southern District of Texas to bar a Houston area tax return preparer from preparing federal income tax returns. 

According to the Department of Justice, Jonathan Perry, who also did business under “X-Pert Tax Services,” filed numerous tax returns where he “significantly overstated the customers’ tax refunds by fabricating employee business expenses, household help income, business losses and/or by falsely claiming education credits and fuel excise tax credits to which the customers were not entitled.”

The complaint alleges that by “repeatedly understating” his customers’ tax liabilities, Perry and his businesses have cost the United States more than an estimated $4.4 million in tax revenue over the last four years. Hubert’s warning to “stay vigilant” is warranted, because when the IRS identifies a false return, the taxpayer — not the return preparer — must pay the additional taxes and interest and may even be subject to penalties. This is generally the case even when a taxpayer claims no knowledge of false expenses, deductions, exemptions, or credits reflected on their tax return.

In an effort to combat the impact of return preparer fraud, the IRS offers several resources including information on its website for choosing a tax preparer, a free directory of federal tax preparers, and information on how to avoid “ghost” tax preparers

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with federal criminal investigations.  If you need assistance with such a matter, please contact us today.