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Whether it’s tax time or not, when Americans approach tax professionals for advice, they are relying on the fact that the tax expert is exactly that: an expert. From tax advisors, preparers, or even lawyers, the public is under the impression that they will not be mislead or put in jeopardy by their chosen advocate. But as the subjects of today’s story will demonstrate: not every tax preparer out there is honest. Furthermore, it is crucial that American taxpayers become aware of their liability in the event that a tax preparer leads you astray.
Two sisters-in-law in Georgia were sentenced to hard time in federal prison and ordered to pay hefty restitution last week after pleading guilty to various charges earlier this year relating to a tax preparation scheme. Angela Miller, 48, of Milledgeville, Georgia, and Lee Lynwood, 47, of Eatonton, Georgia were each sentenced to serve just over one year in a federal prison for operating a tax preparation service that fraudulently procured refunds from the IRS by illegally manipulating their clients’ tax returns. In addition to the prison sentences, the sisters were ordered to pay restitution to the IRS in the amount of $44,214
According to a Department of Justice press release, Miller and Lynwood operated A&L Tax Services in Georgia and helped taxpayers receive refunds that they weren’t entitled by inflating expenses and credits, such as the first-time homebuyer’s credit. In May of 2008, the IRS caught on to the sisters and revoked their eFIN, the ability to electronically file tax returns on behalf of clients. In response, Miller and Lynwood directed a friend to apply for, and receive a different eFIN. Further, the sisters established another tax preparation entity called B&F Tax Services and opened up a bank account in the name of their friend who had acquired the eFIN so their fraudulent tax preparation could continue.
In The End, Accuracy Is The Taxpayer’s Responsibility
It is vital that taxpayers understand what happens when their tax preparer makes a mistake on their taxes. Whether the actions by the preparer are an accident, or willful like the situation here, the taxpayer is nonetheless responsible for the underlying tax. The reason for this treatment is simple: taxpayers shouldn’t be able to turn a blind eye to potential tax fraud and reap the rewards of it at the same time. Although the clients of Miller and Lynwood may not have known that their taxes were not in honest hands, they were able to benefit from it.
All of this is not to say that there are no remedies for taxpayers that have been duped. In a lawsuit for malpractice, a taxpayer can recover for penalties and interest that came about because of the failure to accurately file a tax return. Furthermore, tax professionals who frequently prepare returns ought to know that there are various methods to protect yourself when taking an uncertain tax position. Tax preparation fraud is not something to balk at, as the IRS will stop at nothing to make sure that those entrusted with preparing the taxes of the millions are not themselves committing tax crimes.
Contact an Experienced Tax Attorney Today
When reviewing the information above, one thing is clear: whether you are a taxpayer who relies on professional advice or you are a tax preparer who gives it, if the IRS begins to question the validity of either you or your client’s tax returns, the advice of an experienced tax attorney should be sought immediately. A simple audit of a tax return has the ability of quickly transforming into a criminal investigation, a scenario that is both scary and expensive.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have years of experience representing both taxpayers and tax preparers who are under examination or investigation by the IRS. Our experienced attorneys have also represented clients in civil and potential criminal tax litigation. If the IRS comes knocking, don’t answer the door without the zealous representation by a group of competent and highly experienced tax professionals. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.