Crackdown on Fraudulent Tax Return Preparers: Recent Criminal and Civil Enforcement against Fraudulent Tax Preparers Has Been Highlighted in Stepped-Up Activity by the Treasury and Justice Departments

By Pace, Ryan H. | Journal of Accountancy, August 2007 | Go to article overview

Crackdown on Fraudulent Tax Return Preparers: Recent Criminal and Civil Enforcement against Fraudulent Tax Preparers Has Been Highlighted in Stepped-Up Activity by the Treasury and Justice Departments


Pace, Ryan H., Journal of Accountancy


Total investigations initiated by the IRS'S Criminal Investigations division rose in fiscal year 2006 from the previous year, as did the division's time spent on tax-related investigations, the Treasury Inspector General for Tax Administration reported in June. TIGTA noted that the present enforcement climate represents a reaction to an erosion of the Service's enforcement activities in the late 1990s and a recognition that enforcement had drifted away from tax compliance to investigating related violations of money laundering and organized crime.

A similar recommitment within the Department of Justice's Tax Division has garnered more than 240 injunctions in the past six years against preparers of false or fraudulent tax returns and promoters of tax fraud schemes. This spring, the DOJ sought an injunction against more than 125 Jackson Hewitt franchises in four states for allegedly engaging in tax return preparation scams.

CONGRESS GETS INTO THE ACT

For the vast majority of tax practitioners who strive to represent clients with tax positions that reflect a good-faith effort to comply with tax law, the stricter climate also has had repercussions. Congress has strengthened penalties against tax preparers who file a return containing a position for which there is not a reasonable basis. In May, the Small Business and Work Opportunity Tax Act of 2007 amended IRC section 6694(a) to provide higher penalties for tax practitioners who prepare a return or refund claim reflecting an undisclosed unreasonable position. A reasonable position is defined as one that the practitioner reasonably believes is more likely than not to be sustained on its merits.

The new standard is considered higher than the old laws realistic possibility that a position would be sustained. Moreover, monetary penalties increased from $250 to the greater of $1,000 or half of the income derived from preparing the return, and the new law extends the penalty beyond income tax returns to those for gift, estate, excise and employment taxes. For a willful or reckless understatement of tax liability, the new law increases the penalty from $1,000 to $5,000 or haft the preparers income derived from preparing the return, whichever is greater. The new rules were supposed to go into effect immediately, but the IRS recently announced in Notice 2007-54 that it would delay the effective date of the penalties until 2008 (see "Tax Matters," page 72).

The changes had been proposed earlier in the Bush administration's 2008 budget. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Crackdown on Fraudulent Tax Return Preparers: Recent Criminal and Civil Enforcement against Fraudulent Tax Preparers Has Been Highlighted in Stepped-Up Activity by the Treasury and Justice Departments
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.