Tax Fraud Might Mean Tax Preparer, Too

In a recent Tax Court (128 TC 4) ruling, the judges ruled that the three-year statute of limitations could be waived for fraud even if the fraudulent intent came from the tax preparer rather than the taxpayer. In the case, an Atlanta truck driver (Vincent Allen) used income tax preparer Gregory Goosby, who was convicted of fraudulent tax preparation in 2006. The questionable returns were filed for 1999 and 2000 and the tax deficiency notice was issued in 2005. Back taxes of about $12,200 were sought, but no penalties were assessed. Citing Section 6501 (c)(1), the court ruled that the presence of fraud outweighed lack of taxpayer intent.

It will be interesting to see whether the ruling is appealed and whether higher courts will accept the appeal. Nevertheless, the case sends a clear warning: Be careful who you engage as a tax preparer!