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There are an array of tax scams that fraudsters and other dishonest individuals use to attempt to deceive or otherwise take advantage of members of the public. While stolen identity tax return fraud is one of the most common forms of fraud reported nowadays, it is hardly the most pernicious. SIRF fraud certainly causes problems for the taxpayer, but it does not use the taxpayer’s faith in the tax system against him or her. Furthermore, SIRF fraud does not call the reputation of thousands of other honest, legitimate tax preparers into question. Unfortunately, maximum refund and false tax return scams targeting unsuspecting taxpayers are corrosive to both of these sources of trust causing damage to not only the taxpayer’s belief in the tax system but also to his or her trust in those who hold themselves out to the public as tax experts.
Therefore, the IRS and Department of Justice aggressively pursue tax preparers who commit dishonest or fraudulent acts to gain a business advantage. While we have previously briefly discussed the unfortunate exploits of Erik Pittman and Jeremy Blanchard of Mo’ Money Taxes, new developments in the criminal matter against the preparers warrants an update on the situation.
Mo’ Money Taxes is a tax preparation business that has long been on the radar of the IRS and federal law enforcement officials. In 2012, a Mo’ Money Taxes franchise owner, Jimi Clark, was indicted for tax fraud. Prosecutors claimed that Clark falsely claimed educational credits on tax returns. In July 2013, Clark pleaded guilty to improperly claiming the American Opportunity Credit on 47 tax returns. In November 2013, Clark was sentenced to 20 months in federal prison for the fraud. Unfortunately, this previous tax fraud conviction in the same tax preparation chain was not sufficient to deter two additional preparers from Mo’ Money Taxes from engaging in similar practices.
Erik Pittman and Jeremy Blanchard were both tax preparers from Mo’ Money Taxes. Like Clark, Blanchard and Pittman also fraudulently claimed tax credits for clients of the company under the American Opportunity Credit. In addition, Blanchard and Pittman also inflated and made fictitious claims under the Earned Income Tax Credit. In light of the sophistication of IRS auditors and the fact that the tax preparation company was already on the radar of federal authorities, it is perplexing that these tax preparers would employ substantially similar tactics as the already convicted Clark.
Pittman and Blanchard have both pleaded guilty to inflating and otherwise filing false tax returns with the IRS. They both admitted that their conduct has resulted in a loss of more than $250,000 but not greater than $550,000 to the IRS. Blanchard and Pittman face sentencing in June 2016 where they each could face up to 8 years in prison and a fine of up to $500,000.
While a large tax refund is certainly tempting, taxpayers file and certify their taxes under the penalty of perjury. As such, taxpayers remain responsible and liable for the contents of their tax returns. Thus, a short-term gain at the expense of long-term exposure to an audit or another enforcement action including facing felony tax evasion charges is never justified and taxpayers are well-served by recognizing some of the tell-tale signs of fraudulent preparers.
To start, fraudulent tax preparers often make outlandish or too good to be true promises regarding their ability to obtain the largest refund possible or a bigger refund than any other preparer. These promises may even be made prior to the preparer having any opportunity to review the taxpayer’s finances. Likewise, a tax preparer who claims to have a one size fits all tax plan that can work for all taxpayers should also trigger red flags. Tax filings and the deductions and exemptions any person can claim are highly individualized and there is no universal tax minimization plan.
Furthermore, if the taxpayer’s refund or payment owed differs substantially from previous years despite little to no changes in the taxpayer’s finances, this is also a sign that something has likely gone wrong. While a first step should be asking for the preparer to look back over his or her work, this step will do little to protect you if the tax preparer is engaging in a scam or other fraudulent behavior. Thus, the best thing to do is to ask for your W-2s, 1099s, and other tax documentation and seek a second opinion from a non-affiliated tax preparer or tax preparer agency. Alternatively, it may even be prudent to seek the advice of a tax lawyer if you have filed taxes with the preparer in previous years to determine what your exposure is to an audit or other enforcement actions.
If you believe that a tax preparer has taken advantage of your trust, it’s important to fix the problem as soon as possible. Furthermore, your diligence may help prevent other taxpayers fall victim to the same conduct. To schedule a reduced-rate, confidential consultation call the experienced and strategic tax lawyers of the Tax Law Offices of David W. Klasing today at 800-681-1295 today or contact us online.