A Texas tax preparer and his two children were convicted for defrauding the U.S. after filing false tax returns to inflate their clients’ refunds. They fabricated clients’ Schedule A, itemized deductions, and Schedule C, sole proprietorship profit and loss statements, claiming the taxpayer owned a business when no such business existed, claiming unreimbursed employee expenses such as travel and per diem, and claiming business expenses that were never incurred. The company also had a “tax preparation manual,” which was a handbook that outlined exactly how to commit fraud. The manual advised tax preparers to manipulate income to maximize refunds rather than referring to the law to determine whether an activity was a business for income tax purposes and whether expenses properly qualified as a business deduction.
(www.justice.gov/usao-ndtx/pr/san-angelo-tax-preparer-sentenced-14-years-tax-fraud)
CPAs, get four hours of fraud CPE with our Fraud Essentials for CPAs Webinar. Click here for more information.
