Thursday, February 01, 2007

IRS to Tax Fraudsters: Go Ahead, Make Our Day

NOTE: I promise that this post will be less long-winded than its predecessor.

As January ended and tax season started to take shape, the IRS announced an 89% success (incarceration) rate on fraud prosecutions for the 2005 season, a 3% increase over the previous season. Fraud indictments went up from 119 to 135, even though investigations went down from 248 to 197. Common forms of tax fraud cited included excessive deductible expenses or unallowable credit. Warning signs of a questionable preparer include: advertising emphasis on biggest refund, contingent fee for tax return preparation, brief time in tax preparation business (obviously not in all cases) and asking clients to sign a return before completed.

Congratulations to the IRS on its increased efficiency in getting indictments and convictions per investigation. One would think that the warning signs mentioned would common sense, but some taxpayers may not know that accountants, unlike personal injury lawyers, rarely work for contingent fees and that a big refund, even if there are no obvious math errors, is not ALWAYS the correct refund.


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