WASHINGTON — The Internal Revenue Service’s Criminal Investigation Division (IRS-CI) and the United States Attorney’s Office for the District of Maryland reminded taxpayers today to file accurate tax returns and choose a tax preparer wisely. The nation’s tax season starts on Friday, February 12, 2021, when the agency begins accepting and processing 2020 tax year returns.
U.S. persons are subject to tax on worldwide income from all sources. Most taxpayers meet this obligation by reporting all taxable income and paying taxes according to the law. However, those who willfully hide income should know that the IRS works across its divisions to ensure the highest possible tax compliance. Taxpayers found to be committing fraud may be subject to penalties including payment of taxes owed plus interest, fines, and jail time.
“IRS-CI strives to hold those who willfully fail to comply with our nation’s tax laws accountable for their crimes, including return preparers who prey on individuals during filing season,” said Special Agent in Charge Kelly R. Jackson. “Each year we investigate return preparers engaging in fraudulent behaviors where the victims may not be aware of the preparer’s criminal activity. We are providing tips on choosing a reputable return preparer in an effort to prevent taxpayers in Maryland from being victimized.”
“Those who prepare and file fraudulent tax returns cheat all honest taxpayers,” said U.S. Attorney Robert K. Hur. “Federal agents and prosecutors have a duty to pursue perpetrators of such fraud schemes and try to recover money stolen from the United States Treasury.”
Tax return preparers are vital to the U.S. tax system. As of tax year 2018, 55 percent of taxpayers used a paid preparer. Although most preparers provide honest and professional services, there is a small number of dishonest preparers who set up shop during filing season to steal money, personal and financial information from clients. Taxpayers can avoid falling victim to unscrupulous preparers by following important steps.
Tips when choosing a tax preparer:
- Look for a preparer who is available year-round in case questions arise after the filing season.
- Ask if the preparer has an IRS Preparer Tax Identification Number (PTIN), which is required for paid preparers.
- Inquire about the preparer’s credentials and check their qualifications.
- Ask about service fees. Avoid preparers who base fees on a percentage of their client’s refund or claim to offer a bigger refund than their competition.
- Never sign a blank or incomplete return and review it before signing. Refunds should go directly to the taxpayer, not the preparer.
For more tips on choosing a tax professional or to file a complaint against one, visit IRS.gov. Taxpayers who suspect tax violations by a person or business, may report it to the IRS using Form 3949A, Information Referral.
The IRS Criminal Investigation Washington D.C. Field Office is committed to protecting Maryland taxpayers from others cheating the U.S. tax system. Here are some examples of some of the most egregious criminals that have been recently investigated and brought to justice:
- In January 2020, the owner of a Frederick payroll processing business was sentenced to 4 years in prison for using funds from clients’ tax escrow account to pay his own personal expenses.
- In December 2019, a Maryland tax preparer pled guilty to preparing false tax returns and aggravated identity theft. Sentencing is scheduled for April 9, 2021.
- In May 2019, a fraudster was sentenced to 11 years in federal prison for stealing the identities of hundreds of victims to fraudulently obtain more than $2.2 million in tax refunds.