April 15th has come and gone, which is the deadline for filing your individual income tax returns. Maybe you used a local tax preparer or maybe you prepared your own tax return. If you live in Colorado, you may have heard that two tax return preparers or companies in Colorado have been accused of preparing fraudulent tax returns. U.S. Attorney John Walsh and Internal Revenue Service supervisory special agent Stephen Boyd have reiterated the fact to tax return preparers that those who prepare fraudulent tax returns and defraud the federal government will be criminally prosecuted.
LM Tax Services was operated by Lance McCuistion of Thornton, Colorado, and Mr. McCuistion had plead guilty to preparing fraudulent tax returns. Anne Rasamee of Denver, Colorado operated Cheapertaxes with Austin Ray and a federal grand jury has indicted Rasamee on charges of a conspiracy to defraud the United States government and filing fraudulent tax returns. Rasamee appears to have been charged with another 30 counts of preparing false tax returns. See the article by the Denver Post.
Lance McCuistion falsely increased deductions such as charitable contributions and child care expenses. Such false deductions would lower his clients taxable income and based upon 18 tax returns he reduced his clients tax bill by a combined $70,000. That is quite a tax savings! As a taxpayer, it is important to remember that you may still be liable for an increase in tax even if you paid a preparer to prepare your tax return. Thus, if your refund is larger or appears too large or too good to be true, you may want to have the tax return checked by another tax professional.
McCuistion was asked to prepare tax returns by undercover agents from the Internal Revenue Service and apparently was open in regards to discussing how he prepared fraudulent tax returns for his clients. This fraud charge can lead to five years in a federal prison in addition to a $100,000 fine. Each count of preparing a false tax return can lead to three years in prison and $250,000 fine.
Again, caveat emptor when having your tax return prepared. As the taxpayer, you could be the one responsible for paying the tax bill if changes are made to your individual income tax return.