The temptation to get a bigger tax refund payment can lead you to commit tax fraud. And the IRS makes no difference between an unwitting mistake and a deliberate case of an attempt to hoodwink the law.
There have been many instances of tax fraud during the pandemic years as the total numbers have grown exponentially. And so have the number of attempts to defraud the system. While most get away with penalties, without proper guidance and advice, it is easy for a minor matter to spin out of control.
The IRS treats false tax returns and other documents seriously. And if they turn the spotlight on you, you can be sure that they will find something substantial. Civil cases can even be referred for criminal tax investigation. And the end result might be arrests and tax-related criminal charges.
Filing Returns Is A Serious Business And Any Fraud Related To Filing And Tax Refunds Could Have Serious Repercussions
It is imperative that you do not take a tax refund fraud charge, or for that matter, any matter related to taxes. There are numerous conmen who promise to rescue the taxes that you owe, either through generous deductions or by promising tax-free income.
Such schemes also include other creative ways that convince you to pay less than what you owe or claim a bigger tax refund that you are eligible for. There are such promoters, who are both individuals and firms who sell or promote schemes that seek to bend or break tax rules. They throw you in the deep end of the poll while pocketing the lion’s share of the profits.
The common elements of such tax schemes include positioning these scams as business opportunities or financial products. These scammers even advertise their fraudulent schemes through the internet, social media, fliers sent directly to your house, and newspapers.
The scammers come up with various attractive sales pitches including webinars, paid seminars, and free info sessions. They promise hefty tax savings which often include large returns on small investments and also huge tax refund checks.
They demand a portion of the anticipated tax refund as the promoter’s fee. This is a sure red flag because the bigger the tax refund, the greater their commissions. And this is one situation where they will surely try to manipulate the system to their benefit. And you will end up being the fall guy. Anything that seems too good to be true should be avoided at all costs.
Such tax scheme promoters are thorough professionals and present a polished front. They will go to great lengths to make tier fraudulent schemes seem legitimate.
A general profile of a fraud tax promoter would be a person who is very charming and personable. Their presentations will always be polished and will promise much at the least amount of risk. Such tax promoters are both individuals and groups and work for a commission or payment from the filer or from their investment.
All tax promoters will try to go for a contract based on a share of the tax refund amount. This works for them as the more they increase the tax refund check fraudulently, the greater their share in the spoils. And all along the tax filer is taking all the risk as it is they who will have to face the IRS once the game plan is up.
Towards this end and to make the scheme seem genuine, the tax promoters provide letters from professionals and claim that their scheme is approved by the IRS. They also discourage filers from seeking an independent opinion or from speaking with the IRS.
So if you are approached by preparers offering uncharacteristic and unusual tax refunds that seem implausible, it is a sure indication that there are questionable practices involved. Never assume that these schemes and the accompanying tax refunds or deductions are legal or will not fall under the notice of the IRS.
While most tax preparers provide genuine and excellent service to filers, there is a growing number of scammers who file fraudulent and false tax returns. They plan to make some extra money while putting the filers at risk.
Get a second opinion the moment you suspect or detect anything deceptive. You have to always keep in mind that even if your tax file is being prepared by an outsider, you are fully responsible for all the information you have supplied to the IRS.
You Could Face Serious Consequences For Your Action
There has been an increase in the audits done on promoters. .the IRS has also improved its information-gathering capabilities and also informs filers on ways to recognize fraudulent tax preparers.
The IRS also continues to identify and shut down questionable tax schemes.
T taxpayers who continue to opt for such schemes and those who promote such schemes will face serious consequences that include fines, penalties, court fines, and even time in prison. And as a participant in this crime, you could end up being assessed additional taxes on top of the fees you have already paid to the tax promoter.
The IRS regularly cracks down on such fraudulent tax promoters to ensure total fairness in the whole tax system. The agency can also apply 3rd-party penalties against errant preparers, promoters, Preparers, and other parties who deliberately file or prepare false statements, or suppress information on other individuals’ tax returns.
Third-party civil penalties are serious and can lead to large financial levies. The IRS also investigates and prosecutes those who counsel and promote others to indulge in tax evasion. When filers get convicted of tax evasion, they must repay the full amount of the tax they owe, plus interest and penalties as assessed by the IRS.
Further, the court has the power to fine such errant filers up to 200% of the tax evaded and impose a jail term.
The moment you realize that you are being proposed or sold a deal that seems too good to be true, you should seek independent advice from a reputable tax professional.
