Each year, most Americans diligently prepare their taxes or pay a tax professional to prepare it for them. The vast majority of Americans want to avoid the potential consequences of being caught making false assertions on an income tax return and expect that hiring a professional will aid them in avoiding this problem. Even innocent mistakes can result in penalties and interest due to the IRS. That being said, there will always be taxpayers and tax preparers who make it their goal to obtain every dollar that they can off of the IRS, whether the means are legal or not. This type of unlawful behavior is alleged to be present in a case recently filed by the Department of Justice against a Southern California tax preparer.
According to a Department of Justice press release, Marla Lynn Cunningham was the proprietor of Cunningham’s Tax Service, a tax preparation business that operated out of El Cajon, California. She is alleged to have fraudulently decreased tax liabilities and procured refunds that weren’t owed by claiming various types of false expenses, charitable deductions, and medical expenses. The indictment further alleges that Cunningham fraudulently claimed educational credits in an attempt to secure additional refunds.
Each individual count of aiding and assisting in the preparation of false federal income tax returns carries a potential prison sentence of three years. Furthermore, each count also could result in a monetary fine of up to $250,000. Together, the potential criminal penalties could see Cunningham spend a large portion of her life behind bars and devastate her financial life for years to come.
There is no doubt that tax preparation fraud should not be condoned, but not every tax preparer that is investigated or prosecuted for engaging in it is guilty. Over the past year, a cursory review of the Department of Justice’s actions shows that indictments against tax preparers have increased exponentially. This uptick in prosecutions could lead a reasonable person to believe that investigations into innocent tax preparers have also increased. Just because a tax preparer is being investigated, doesn’t automatically mean that they have committed a crime.
When an investigation into a tax preparer begins, an initial reaction may be to try and explain away whatever behavior triggered the IRS to investigate. Although trying to talk your way out of a line of government questioning may be successful once in a blue moon, it is not recommended. Typically, a tax professional or taxpayer that doesn’t consult with an experienced tax attorney prior to a meeting with the IRS or other government investigators finds themselves digging themselves holes that they are unable to get out of or giving away information that will later be used against them. When the potential for a federal prison sentence and substantial fines and penalties are staring you in the face, you can’t afford to not contact a tax attorney.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have a plethora of experience representing taxpayers in an array of tax matters. From examinations, to investigations, to full-blown criminal or civil litigation, our attorneys will ensure that your best interests are always prioritized. When the IRS and the Department of Justice come to the table to investigate or negotiate, they are sending their best. Ensure that you have a zealous legal team to advocate on your behalf. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.