As tax season approaches each year, many individuals rely on professionals to prepare and file their returns. Recently, the U.S. Department of Justice announced renewed enforcement efforts targeting dishonest tax preparers who submit false information, inflate refunds, or otherwise misuse the tax system. The announcement serves as a reminder that taxpayers themselves can face serious consequences when inaccurate returns are filed in their names, even if the wrongdoing began with a preparer.

Why Is the Justice Department Focusing on Tax Preparers?

Federal prosecutors have reported a steady stream of cases involving preparers who falsified deductions, invented businesses, or diverted client refunds. In recent enforcement actions, several preparers received prison sentences ranging from months to more than a decade, and many were ordered to pay substantial restitution. Courts have also issued permanent bans preventing certain individuals from preparing tax returns in the future.

These actions are intended to stop ongoing fraud and to send a clear message that manipulating tax returns is not a minor violation. Instead, it is treated as a serious financial crime that can result in incarceration, heavy fines, and long-term financial consequences.

How Can a Fraudulent Tax Return Affect You?

Many people assume that hiring a preparer shields them from liability, but that is not always the case. A taxpayer signs the return under penalty of perjury, meaning the information submitted is considered their responsibility. If a return contains false claims, the potential consequences may include the following:

  • Repayment of unpaid taxes
  • Interest on overdue amounts
  • Civil penalties that can significantly increase the total owed
  • Audits or further IRS scrutiny
  • In certain circumstances, criminal investigation

Tax fraud convictions can carry severe penalties. Depending on the charges, federal law allows for prison sentences, substantial fines, and restitution orders. Even allegations alone can be stressful, costly, and damaging to a person’s reputation.

What Are the Warning Signs of a Dishonest Tax Preparer?

The Justice Department cautions taxpayers to remain alert for behaviors that often signal misconduct. These may include the following:

  • Promises of unusually large refunds without reviewing records
  • Requests to sign a blank or incomplete return
  • Refusal to sign the return as the preparer
  • Fees based solely on the size of the refund
  • Directing refunds into accounts not controlled by the taxpayer

If something feels questionable, you should always seek a second opinion and/or verify the preparer’s credentials before proceeding.

What Should You Do If You Are Facing a Tax-Related Investigation?

Being contacted by federal investigators or receiving notice of a tax issue can be overwhelming. Many people are unsure of their rights or what steps to take next, and responding improperly can sometimes make the situation worse. An Oklahoma City criminal defense lawyer at The Jones Firm, PLLC can help evaluate the circumstances, explain potential exposure, and communicate with investigators when necessary.

Ultimately, the Justice Department’s recent announcement highlights a broader trend of increased enforcement in financial and tax-related crimes. While most preparers act ethically, the actions of a few have led to serious legal consequences for both professionals and taxpayers.

Carefully choosing a qualified preparer, reviewing your return before signing, and seeking legal advice promptly if concerns arise can help reduce risk. For those already facing allegations or investigations, contact our firm today.