Stop the Abuse

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If you haven’t already submitted your 2016 federal tax returns, you may be pressed to seek help from a tax preparer to make the April 18 deadline. (Keep in mind that state income tax return due dates vary.) But, it’s important not to rush into choosing someone to help you fill out those tax forms. The Internal Revenue Service (IRS) reports that in 2016, 202 abusive tax return preparers were sentenced to prison with an average time of 22 months behind bars. The tax return preparer at the center of today’s “Fraud of the Day” received a lengthier prison sentence and must pay back a substantial amount of restitution to make up for his criminal actions.

The IRS has implemented several programs to help combat abusive tax preparers and protect taxpayers. The Criminal Investigation Return Preparer Program fosters compliance by identifying, investigating and prosecuting unscrupulous return preparers who frequently prepare bad returns for large numbers of taxpayers. (Unfortunately, in cases like that, it is the taxpayer who often gets stuck with paying additional taxes, interest and can be subject to penalties and even possible criminal prosecution.) The IRS also has an oversight program that regulates paid tax return preparers. While the agency has used these two programs to significantly slow down the instances of tax return fraud, 90 taxpayers were abused by today’s fraudster before his scam got shut down.

A California man, who worked as a tax preparer over a nine-month period, conspired with others to file around 90 fraudulent tax returns with the IRS. He erroneously claimed a first-time homebuyer credit worth as much as $7,500. The fraudulent claims totaled more than $695,000 and the IRS paid out more than $570,000. The tax refunds were subsequently electronically deposited in multiple bank accounts controlled by the co-conspirators.

The 33-year-old tax preparer was sentenced to 27 months in prison and must pay $573,332 in restitution. His two co-defendants pleaded guilty to conspiring to defraud the U.S. One of them was sentenced to six-and-a-half years in prison and more than $500,000 in restitution. The other co-conspirator awaits sentencing.

So, the lesson learned here is that it’s important to be choosey when picking a tax return preparer. Ask your friends, family, neighbors and co-workers for a recommendation before signing on the dotted line. Just remember, you are responsible for all information submitted, whether you or someone else prepared your tax return.

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Tax fraud scheme results in more than two-year prison sentence,” published by The Sacramento Bee on October 28, 2016.

A Loomis man has been sentenced to two years and three months in prison for his role in a tax refund fraud scheme.

Aleksandr Kuzmenko, 33, was sentenced Friday in Sacramento by U.S. District Judge Garland E. Burrell Jr. and ordered to pay $573,332 in restitution to the Internal Revenue Service for conspiracy to defraud the United States, according to a U.S. Attorney’s Office news release.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.