With this year's tax deadline looming, many Wisconsin residents are frantically searching for receipts, W-2s and all the other documentation they need to file their income taxes. Some filers will undoubtedly make mistakes in their accounting, which the Internal Revenue Service usually acknowledges with a letter telling them to fix the error. But the IRS isn't as forgiving in cases of suspected tax fraud.
Two Milwaukee women convicted of tax fraud were sentenced last week to federal prison and must pay thousands of dollars in restitution to the IRS. They filed more than 170 tax returns for friends and family members, seeking more than $1.5 million in federal income tax refunds. The tax forms contained false income, employment, dependents, tax withholdings and estimated payments.
One of the women was sentenced to almost four years in prison and ordered to pay $450,000 in restitution. The other received a two-year prison sentence and must pay $70,000.
These women were alleged to have intentionally scammed the IRS, but as the IRS points out in its annual "dirty dozen" tax scams list, it's up to filers who have someone else prepare their taxes to ensure they aren't being duped. The IRS said it's seen a recent increase in cases where fraudulent tax preparers promise a refund or a tax credit payment that doesn't exist. But even filers who are scammed are legally responsible for the forms they file.
Considering that almost 60 percent of taxpayers have their taxes prepared by someone else, the possibility of being held responsible for another person's scam is very real.
If you are accused of tax fraud as a result of an error in your tax preparation or a scam by your preparer, it pays to seek out an attorney who's well-versed in the defense of fraud and other white collar crimes.
Source: Milwaukee Journal Sentinel, "2 Milwaukee women sentenced for 170 false tax returns," Marissa Evans, March 4, 2012