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IRS tags MD tax preparers, but what happens to the tax payers?

The government recently announced the clampdown on three tax preparers in Prince George's County, Maryland. By virtue of orders issued by two separate federal judges, a father, a son and the father's ex-wife have been permanently scrubbed from the roles of individuals who can file tax returns with the Internal Revenue Service on behalf of other tax payers.

The Department of Justice says the injunctions are just three of hundreds that have been pursued over the past ten years and reflect the government's continued dedication to preventing income tax fraud by third-party preparers. 

According to the DOJ, the three P.G. County residents operated under the aegis of a firm called Universal Tax Services. It's not clear how long a time frame the three carried out their alleged practices, but officials say they used standard, commercially available preparation software to generate the returns, charged $300 for each and often generated revenues of $30,000 a day.

Officials say the three made it a practice to pad the returns with fraudulent deductions, including charitable donations, and business expenses. They covered their activities by not signing the returns as the preparers or attaching their IRS preparer identification numbers. Individual filers allegedly were told to sign and mail the returns themselves.

One interesting element of the story that doesn't seem to have been touched on is the question of how many returns may have been fraudulently filed by unsuspecting taxpayers. Nor do any of the reports indicate what may have happened in connection with their returns.

If any of these individuals got caught in the IRS crosshairs for having issues with their returns, very likely they felt the anxiety that such attention sparks. Turning to an experienced attorney is typically the most effective way of addressing the concerns.

Source: The Washington Post, "3 tax preparers are permanently barred," June 9, 2013

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