IRS Criminal Investigation and U.S. Attorney’s Office Remind Taxpayers to File Accurate Returns; Choose a Tax Preparer Carefully

Kansas City, Kansas — The Internal Revenue Service’s Criminal Investigation Division (IRS-CI) and the United States Attorney’s Office for the District of Kansas 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.

“As we approach the beginning of the tax return filing season, it is important for taxpayers to be careful in selecting the tax professional who will prepare their return. The IRS does not want individuals to become victims of an unscrupulous return preparer,” said Acting Special Agent in Charge David Talcott at the Internal Revenue Service – Criminal Investigation. “Each year, IRS-CI special agents and the U.S. Attorney’s Office investigate and prosecute return preparer fraud, which includes adding false deductions and credits in order to inflate refunds. This criminal activity affects taxpayers, but has serious consequences for the unscrupulous preparer.”

“We want to remind everyone to work with reputable tax preparers as we enter this filing season,” said U.S. Attorney Stephen McAllister. “Tax fraud costs U.S. taxpayers millions of dollars each year, my office will continue to hold those found to be behind these fraudulent claims accountable.”

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 St. Louis Field Office and the U.S. Attorney’s Office in the District of Kansas are committed to protecting Kansas taxpayers from others cheating the U.S. tax system. Here an example of a current investigation that has been brought to justice:

• In July 2020, Sonia Hernandez-Smith pleaded guilty to aiding and assisting in the preparation of false returns. She admitted she put false information on her client’s Schedule 8812, which is used to claim the Child Tax Credit. She obtained Individual Taxpayer Identification Numbers or ITINs for children she knew did not live in the United States, and whom were ineligible to claim the child tax credit. However, Hernandez-Smith put them as dependents on her client’s tax returns when her clients were not entitled to them. Lastly, she admitted she did this for numerous clients. Her sentencing is scheduled on May 17, 2021.

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