Kelly Bullis: Dishonest tax preparers

Just like any profession, there are some folks that are not honest and upright citizens. Instead, their motivation is all about how much money they can steal from somebody. We usually call such folks, “criminals.”

Well, here are a few stories to warm your heart. The IRS caught these and many more. (The IRS isn’t just after dishonest taxpayers; they have a special group of agents that go after dishonest preparers too.)

Partners in a preparation firm in Tampa, Florida are each facing eight-year prison terms for preparing false federal income tax returns for numerous clients to generate false, inflated federal refunds. Their method was to create fictitious businesses which maximized the Earned Income Tax Credit; they also fraudulently reported that clients were entitled to claim credits for fuel taxes or education expenses.

Have you been a victim of tax identity theft? Well, here’s one for you. A tax preparer in Fountain Valley, California is facing five years in prison for filing hundreds of returns using other people’s stolen tax ID information. The person who stole the information was an acquaintance who worked as a social worker in Orange County. He stole Social Security numbers and other ID information. They worked up a scheme to prepare fraudulent 1099-MISC forms. This gave them fake expenses on their client’s businesses, which reduced the tax the clients owed on their legitimate business tax returns… for a fee of course.

The bad tax preparer then filed fraudulent tax returns for the victims, reporting the fraudulent income from the form 1099-MISC they created. This caused the fake tax returns to claim Earned Income Tax Credit, Child Tax Credit, etc. All the refunds then went to the dishonest tax preparer.

Another bad preparer in Detroit got caught creating false and inflated deductions for charitable contributions. They made up numbers to get their clients the refund amounts they requested. So, in this case, the bad preparer got entangled with bad taxpayers.

Finally, a bad tax preparer in Lexington, South Carolina got caught claiming fraudulent deductions for his clients. Such things as made-up rent, utilities, meals, gifts, dues, etc. This not only reduced Federal Income Tax, but also Self-Employment tax for his clients. The clients thought he was a “miracle-worker” for getting them such large refunds.

At our CPA firm, we hold to the highest ethical standards. We do not prepare fraudulent returns. We like to sleep soundly at night. We’ve been told by IRS agents multiple times that the IRS keeps records on tax preparers, and it is VERY important to us to have a good reputation with the IRS.

Have you heard? Job 31:6 says, “Let me be weighed on honest scales, that God may know my integrity.”

Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the web at BullisAndCo.com. Also on Facebook.