Although there never was a “good” time to cheat on taxes, now is worse than ever for taxpayers and tax preparers to file fraudulent tax returns. With the IRS getting more funding and 800 more agents to collect taxes, taxpayers and CPAs who deliberately report fraudulent information on tax returns will be hit with severe IRS penalties.

If the IRS detects and proves beyond a reasonable doubt that fraudulence was deliberate, both the tax preparer and the taxpayer will be liable for IRS penalties.

CCH (http://tax.cchgroup.com) reports:

CPA Convicted of Willfully Aiding and Assisting in Preparation of Materially False Returns

A CPA was convicted of willfully aiding and assisting in the preparation of materially false income tax returns for the president and 100-percent owner of a mortgage brokerage firm and his wife. The government proved beyond a reasonable doubt that the CPA prepared the couple’s tax returns and willfully failed to report as taxable income business funds used by the couple for their personal purposes, even though he was aware that the owner received officer’s compensation from the firm, that the firm’s business funds were used to pay the couple’s personal expenditures and that funds withdrawn by the owner for his personal expenses constituted shareholder distributions that were taxable to the couple. Despite such knowledge, he willfully failed to include the amounts as income on the couple’s individual income tax returns. His contention that he believed the owner to have acquired a substantial basis in the corporation was rejected. He knew, or should have known, that the owner lacked basis in the corporation to take any shareholder distributions without declaring them as capital gains on his tax returns.

Protect yourself against fraud by double-checking your information on your tax returns before signing them off. Once your signature is on the return, it legally binds you to the information presented (whether they were fraudulent or not).

If you do find yourself in trouble with the IRS, you may get help from our specialized staff of tax attorneys, CPAs, EAs and tax professionals at TRS. Visit Tax Resolution Services for a free income tax relief consultation or call us at 866-IRS-PROBLEMS (1-866-477-7762).

More Tax Help, IRS News and Tax Relief Tips:

1. Could Expert Tax Help Have Boosted this CPA’s Chances of Fighting IRS Tax Evasion Charges?
2. Take Advantage of The Amnesty Period for Quiet Disclosures as U.S. and Swiss Governments Accelerate Hunt for Tax Evaders
3. Tax Evasion Schemes Are Too Costly To Be Worth The Effort
4. IRS Asserts Position on Tax Protesters: Sanctions Imposed for Advancing and Maintaining a Frivolous Argument
5. Think Like a Tax Lawyer: Beware of Tax Evasion Schemes That Could Lead to Serious IRS Tax Trouble

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This entry was posted on Tuesday, August 11th, 2009 at 12:15 pm and is filed under Tax news and tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.