Self-preparing your tax returns can be intimidating, especially knowing that the IRS may come back and audit you. Hiring a tax professional is a good idea, right? It depends. Depends on who you hire, as you will see from the recent IRS announcements, collected by TaxPro Today during 2013.
Two things are worth noticing:
- The list includes both one-person businesses and large franchise operations
- This Hall of Shame includes a tax attorney, a CPA, and even an EA
Detroit, MI: The U.S. Justice Department has asked a federal court to bar Calvin Carter and brothers Raheen Stroud and Laron Stroud, who do business as E-File Tax Pros LLC and Tax King, from preparing federal returns. According to the complaint, Carter and the Stroud brothers fabricated businesses and reported fake business income and expenses on clients’ returns to achieve reported income to hit the EITC. The complaint also alleges that the defendants prepared returns that falsely claimed the First-Time Homebuyer Credit.
Memphis, TN: Preparer Justin Buford has pleaded guilty to his role in conspiracy to file hundreds of false tax returns in 2010 through a Mo’ Money tax preparation franchise in St. Louis. Buford was indicted with five other individuals from the Mo’ Money franchise and in his plea he admitted to his role in submitting more than 200 returns that falsely claimed the American Opportunity Tax Credit, which is intended to help low- and moderate-income taxpayers attend college. He faces up to five years in prison.
Fresno, CA: Preparer Roberto Olivares, 34, and Rojelio Martin, 30, both of Tulare, CA, have pleaded not guilty to charges stemming from their scheme to defraud clients of tax refunds. According to the indictment, Olivares and Martin defrauded clients of Olivares’ businesses (Success Auto Insurance and Success Income Tax Services) by preparing returns for clients that showed a lower refund then they were entitled to. The defendants then allegedly gave the incorrect return to the client but filed the correct return that gave the taxpayers a higher refund amount. The defendants then took the difference between what was shown to their clients and the actual refunds amounts and used it for their personal benefit.
Houston, TX: Tax attorney and CPA William R. Zweifel has been sentenced to 37 months and was ordered to pay a $10,000 fine and $250,000 in restitution to the IRS. He will be required to serve one year of supervised release and perform 200 hours of community service following completion of the prison term. According to the plea agreement, Zweifel acknowledged that he prepared false returns for some taxpayers that claimed large refunds to which the taxpayers were not entitled by offseting a taxpayer’s income with an alleged loss from either a partnership in which the taxpayer had no partnership interest or from an S corporation that reported no loss for the taxpayer to claim. Zweifel further admitted that the tax loss to the U.S. in this case is approximately $2.2 million.
Tucson, AZ: EA Robert Francis Heckinger, 67, has been sentenced to 60 months of probation and ordered to pay $45,055 in restitution following his pleading guilty to conspiracy to provide false statements to influence a bank, a Class D felony, in connection with a scheme to obtain financing related to real estate. According to the plea agreement, sometime up until 2006 Heckinger provided phony letters of reference for loan applicants to a co-conspirator for money, including one letter that claimed Heckinger had provided tax consultation advice and examined three years of business tax returns for a particular applicant who was seeking a loan for a Tucson property. Heckinger admitted that these were false statements.
Indianapolis, IN: The Justice Department has asked a federal court to bar Cynthia Hawk, who operates Gain Tax Services, from preparing returns. The civil injunction suit alleges that Hawk falsified customers’ incomes in order to claim the maximum EITC. According to the complaint, Hawk, who previously prepared returns in Atlanta, prepared at least 1,501 returns from 2009 through 2012 with unusually high refund rates. The complaint also alleges that Hawk claimed education credits on clients’ returns when the clients did not actually have any qualifying education expenses.
Rancho Palos Verdes, CA: A federal court in Los Angeles has barred a married couple, Henock Teferi and Ruth Berhane, and their company, Plover Financial Services, from engaging in certain abusive tax preparation practices. The defendants are former owners of an L.A.-area Instant Tax Service franchise; ITS is a national tax prep chain based in Dayton, Ohio. According to the government complaint, the defendants operated ITS offices at multiple locations in the Los Angeles area until 2011, and, during that time, their employees allegedly engaged preparing tax forms with unsubstantiated business income, falsely claiming education credits, claiming false filing status, reporting false dependents, and selling deceptive loan products.
Memphis, TN: The United States has asked a federal court to bar husband-and-wife team Ahmed Grant and Lillian Madyun from preparing federal income tax returns for others. According to the complaint, Grant and Madyun operated multiple tax prep businesses in the Memphis area, including SuperFast Taxes, MG Services, and, most recently, Taxes-R-Us, and alleges that Grant and Madyun prepared returns that overstated refunds and understated tax liability through a variety of schemes. The government further alleges that the pair prepared returns that claimed American Opportunity Credits to which their clients were not entitled and without the clients’ knowledge, and that Grant and Madyun ensured that their clients’ refunds were deposited into their own bank accounts. Estimated harm to the government may be as high as $5 million, according to the complaint.
Fortunately, it’s not that difficult to find an honest and ethical tax professional. Read what to look for and use your common sense.