It’s January and tax season is in full swing. The IRS says that because of recent law changes, it can’t start processing certain returns until well into February. That fact has further elevated the stress levels of CPA’s and preparers. With any luck, however, by mid April all can head to Cancun, soak up the sun and drink exotic beverages with fruit and little paper umbrellas. This year, their ranks will be down slightly. The IRS has announced more convictions from last year’s Operation Brass Tax. (Yes, the name is corny.)
Last year the IRS criminally charged 26 preparers with fraud in an operation dubbed Operation Brass Tax. The IRS says it is the biggest takedown of corrupt tax payers in history. U.S. Attorney Preet Bharara said, “Professional tax preparers are supposed to be gatekeepers, not facilitators of fraud.”
The government says undercover special agents posing as customers sought “help” to lower their tax bill. While most tax preparers understand the difference between tax avoidance and tax evasion, these 26 did not.
What did they do?
Prosecutors say the 26 did such things as “create” fake dependents for a fee of $400, steal identities of children and families receiving public assistance, used social security numbers of people who died or are from Puerto Rico, created fictitious businesses with phony losses and inflated legitimate deductions.
The 26 were all from the New York area but the problem is not limited to any one city or place.
Every year a few bad preparers surface. And every tax season, the IRS will crank up its public relations machine and start issuing press releases about tax payers and tax preparers who have strayed from the straight and narrow path.
Mahany Law is a national boutique whistleblower law firm. We represent whistleblowers with inside information about unpaid or unreported taxes. Under the IRS Whistleblower Program, folks with inside information about tax cheats can earn a cash reward of between 15% and 30% of whatever the government collects from the wrongdoer. That includes a percentage of not just any collected outstanding taxes but interest and penalties too.
Generally there is a requirement that the tax debt be $2 million or more or if the case involves an individual taxpayer, he or she must have $200,000 or more in annual gross income. There is a small claims type IRS reward that can pay up to $10 million for cases that don’t meet those thresholds.
Rogue tax preparers are perennially at the top of the IRS most wanted list each year. That means that whistleblowers with information about tax preparers who help others cheat on taxes stand an excellent chance of collecting a reward.