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If your cheating preparer gets caught, so do you

December 03, 2008

New York State just ran a sting operation aimed at fraudulent tax reporters. Russ Fox has the scoop:

William Comiskey, Deputy Commissioner of the New York Department of Taxation and Finance, noted that had the fraud gone undetected it would have cost $4 million in tax to federal, state, and local governments. Worse, "evidence of fraud" was found at 40% of the 85 preparers visited.

This instance shows a brilliant legal mind at work:

In one case, a preparer told an undercover agent to step outside his office and return with a different set of records. When he returned, the preparer told him: "You know why I asked you to do that? Because if I have to swear it, I can say I swear to God that these are the papers you brought to me."

Yeah, I bet it worked out just like that.

Roni Deutch explains that the clients don't get off the hook:

Mr. Comiskey says some preparers have agreed to cooperate and go undercover to show that their clients knew of the fraud and build evidence against those clients -- and, in some instances, against other preparers.
"They are cooperating against their former clients in other ways as well," such as sharing client lists and identifying fraudulent returns, Mr. Comiskey says.

The moral: A preparer sleazy enough to prepare fraudulent returns for you isn't too ethical to sell you down the river.

Tags: tax crime.tax preparers.