How to Report Suspected Tax Fraud Activity to the IRS | Tax Preparer (2023)

How To Report Suspected Tax Fraud Activity To The IRS Against a Fraudulent Tax Preparer.

Introduction: What is Tax Fraud, and Why is it Important to Report Suspected Activity?

Did you know? You can report suspected tax fraud activity to the IRS against a fraudulent tax preparer.

The Internal Revenue Service (IRS) annually receives thousands of reports of suspected tax fraud activity.

Tax fraud is an illegal activity that involves intentionally misrepresenting information on a tax return to reduce the amount of taxes paid. It is a serious crime and can have significant financial and legal consequences for both individuals and businesses.

As such, it is important for taxpayers to be aware of the signs of tax fraud and to report any suspected activity. This article will discuss the definition of tax fraud, the importance of reporting it, and how to identify a fraudulent tax preparer.

Tax fraud can take many forms, from individuals underreporting their income to businesses inflating their expenses to reduce their tax burden. In all cases, tax fraud is illegal and can have serious consequences for those involved.

However, reporting suspected tax fraud activity to the IRS can help stop the fraudulent activity and prevent others from being harmed.

In this post, we will focus on how to report suspected tax fraud activity committed by a fraudulent tax preparer. A tax preparer is an individual or business that helps taxpayers prepare and file their tax returns. While many tax preparers are reputable and provide valuable services to their clients, some are fraudulent and engage in illegal tax practices.

After reading, you should consider taking this information seriously as you choose a tax preparer to handle your taxes. This is because some tax preparers and accountants encourage their clients to cheat on their taxes. Be wary of such practitioners.

Understanding the Role of Tax Preparers

A tax preparer is responsible for accurately preparing and filing a taxpayer’s tax returns. They must have a thorough understanding of tax laws and regulations and must follow all ethical standards. Tax preparers must also keep client information confidential and protect it from unauthorized access.

Choosing a reputable tax preparer is critical to ensuring that your tax returns are accurate and that you follow tax laws. A good tax preparer will ask the right questions, provide clear and accurate information, and help you understand the tax implications of your financial decisions.

Unfortunately, not all tax preparers are reputable. Some engage in fraudulent practices, such as claiming false deductions, inflating expenses, or underreporting income.

If you suspect that your tax preparer is engaging in fraudulent activity, it is important to report it to the IRS as soon as possible.

Common indicators of a fraudulent tax preparer include:

  • Unusual or high fees: Fraudulent tax preparers often charge excessive service fees.
  • Pressure to sign returns before reviewing them: A fraudulent tax preparer may pressure you to sign your tax return before you have a chance to review it, making it difficult to detect any fraudulent activity.
  • Refusal to provide receipts or documentation: A reputable tax preparer will provide you with receipts and documentation to support your tax return. If your tax preparer refuses to provide this information, it may indicate that they are engaging in fraudulent activity.
  • Unusual or false deductions: Fraudulent tax preparers may claim false deductions or inflate expenses on your tax return to reduce your tax liability.

Have you hired a tax preparer with any signs of the above? Protect yourself now. Consider changing them before it’s too late. You can talk to my team and book a quick tax chat with me if you need a new tax preparer who will not take advantage of you.

Steps to Report Suspected Tax Fraud Activity

If you suspect that your tax preparer is engaging in fraudulent activity, it is important to take action to report it to the IRS. The following steps will help you report suspected tax fraud activity effectively:

Gather evidence

The first step in reporting suspected tax fraud activity is to gather evidence. This includes information about the tax preparer and their business, as well as documentation of any fraudulent activity. This information will help the IRS investigate the matter and take appropriate action.

Contact the IRS

Once you have gathered the necessary evidence, the next step is to contact the IRS. You can report suspected tax fraud activity by calling the IRS Whistleblower Office at 1-800-366-4484.

You will be asked to provide information about the tax preparer, including their name, address, and Social Security number. You will also need to provide documentation of any fraudulent activity, such as false deductions or inflated expenses.

Protect yourself

Reporting suspected tax fraud activity can result in serious consequences for the individual or business involved. To protect yourself, it is important to take steps to protect your identity and personal information. This may include using a secure email.

Conclusion: Why Everyone Should Play Their Part in Curbing Unethical Practices in Taxation Industry

Unethical practices in the taxation industry can have negative implications for businesses, individuals, and the economy as a whole. It is, therefore, essential that everyone plays their part in curbing such practices. From government authorities to taxpayers, all stakeholders should work together to ensure that the taxation system is fair and transparent.

This will help create an environment of trust between taxpayers and the government, leading to increased compliance and improved tax revenues. Additionally, it will help protect vulnerable groups from exploitation by unscrupulous tax agents.

Everyone should take responsibility for their actions and be aware of their rights under the law regarding taxation matters. Only then can we create a taxation system that works for everyone’s benefit.

Do you need a reputable tax professional to prepare your tax returns? Contact me. I will earnestly take care of your taxes.

Frequently Asked Questions

  1. How do I report tax cheating?

You can report tax cheating by contacting your local tax authority or the IRS using appropriate methods. If you have evidence of tax cheating, it is recommended to provide it to the tax authority. If you suspect the tax cheating involves a large amount of money or is part of a criminal organization, it may be appropriate to contact the police or other law enforcement agency.

  1. Can you report tax evasion anonymously?

Yes, it is possible to report tax evasion anonymously in the United States; for example, you can report tax evasion to the IRS using its Whistleblower Office’s Form 211, which allows you to report suspected tax fraud anonymously.

  1. Can you go to jail for making a mistake on your taxes?

Yes, it is possible to go to jail for making a mistake on your taxes, especially if the mistake is found to be intentional and fraudulent. Tax fraud is a serious crime and can result in substantial fines, penalties, and even jail time.

However, most taxpayers who make honest mistakes on their taxes will not face criminal charges. The tax authorities typically prefer to resolve tax issues through civil means, such as fines or penalties. If you believe you made a mistake on your taxes, it is recommended that you come forward and correct it as soon as possible to avoid potential criminal charges and reduce the risk of incurring additional penalties and interest.

  1. At what point is it considered tax evasion?

Tax evasion is the deliberate and illegal act of not reporting or underreporting income to the tax authorities with the intention of avoiding paying the full amount of taxes owed. It occurs when a person knowingly and willingly fails to pay taxes that are legally due.

Whether a mistake on a tax return is considered tax evasion depends on the circumstances of the case. If the mistake was a result of ignorance, carelessness, or an honest error, it is not considered tax evasion. However, if the mistake was deliberate and made with the intention of avoiding paying taxes, it could be considered tax evasion.

Examples of intentional acts that could be considered tax evasion include failing to report all income, claiming false deductions, hiding or transferring assets to avoid paying taxes, or participating in a tax shelter scheme that has no economic purpose other than avoiding taxes.

  1. What are the most common tax frauds?

There are several types of tax fraud that are commonly committed, including:

  1. Underreporting income: This occurs when a taxpayer fails to report all of their income on their tax return. This can include not reporting tips, side income, or other sources of income.
  2. Claiming false deductions: This occurs when a taxpayer claims deductions they are not entitled to, such as charitable contributions that were not actually made or business expenses that were not incurred.
  3. Hiding or transferring assets: This occurs when a taxpayer transfers assets, such as money or property, to another person or entity in an effort to hide it from the tax authorities.
  4. Participating in a tax shelter scheme: This occurs when a taxpayer invests in a scheme with no economic purpose other than avoiding taxes.
  5. Paying employees off the books: This occurs when an employer pays employees in cash or other untraceable forms of payment in an effort to avoid paying taxes on their behalf.
  6. Identity theft: This occurs when a taxpayer uses someone else’s personal information to file a false tax return and claim a refund.
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