These days, it is not unusual to hear stories about stolen identities and false tax returns filed by criminals on someone’s behalf. We all try to be careful and protect our personal information as much as possible. However, tax fraud still happens, and problems sometimes come from where you least expect them. Recent tax crime cases from Ohio and Michigan have attracted everybody’s attention mostly because the convicted individuals in these cases were tax return preparers, trusted by their clients.
Almost a year ago, in the court of Ohio, 35 year old Roma Sims pleaded guilty to committing ID theft and implementing a tax fraud plan that involved preparing and filing federal tax returns that requested false refunds. These refunds, which Mr. Sims, with the help of his two accomplices Samantha Towns and Robert Earthman, received from the IRS, totaled $3.5 million. Mr. Sims’ victims were single parents with low income, or parents who were unemployed. Sims and his crime partners had a number of companies, known as Tax USA, Last Minute Tax, X-Press Taxes & Accounting Services, and Simply the Best Tax Service. Mr. Sims’s sentence is 100 months in prison followed by three years of supervised release. He also owes $3,517,534 compensation to the IRS. Ms. Towns received three years of probation for her crime. Mr. Earthman, who was sentenced in June 2014, has to spend two years in prison followed by three years of supervised release. Each of them has to pay the IRS $1,312,514.
A tax preparer from Detroit, Michigan, Gerald L. Hawk Jr., was sentenced to 18 months in prison for preparing fraudulent income tax returns, on which he claimed false First Time Homebuyer Credit. Although the preparer did this for his existing clients, he was aware that these taxpayers were not eligible for the requested credit because they were not going to purchase a home. Mr. Hawk was able to get over $147,000 from the IRS, and was ordered by the court to repay the debt.
This is another reminder of how important it is to be cautious when hiring a tax preparer. Checking for credentials and BBB rating, asking to provide contact information of satisfied customers, and discussing in advance what your preparer is going to do for you in terms of return filing are very important steps in this process. Of course, you should also check the tax return yourself before it is submitted to the IRS. Offers made by a tax preparer to get the largest possible refund or to calculate the service fee based on the amount of the refund should raise a red flag.