Many people understand just how important it is to find a credible tax preparer when it comes to paying the IRS. More to the point, your tax preparer could be held liable, criminally, for making false statements on your tax return (26 U.S. Code 7206). Just recently, a 54-year-old man from Hayward was sentenced to 2 years in a federal facility for his part in preparing false tax forms for clients over a 3-year period (2009-2011). At least 24 clients were involved in the scam, in which the tax preparer knowingly reported incorrect deductions in paperwork for the IRS. He has been charged with a federal felony, aiding and assisting in the preparation of false tax returns.
The federal government takes the preparation of false tax returns quite seriously. In fact, if it can be proven that any individual has been involved in such a scheme to defraud the IRS (for that is what this type of action is considered) by inflating the number of deductions, falsifying business expenses or deductions, or allowing for unallowable credits, then that person has broken the law. According to the IRS website, the incarceration rate for fiscal year 2006 was nearly 90%, suggesting that federal investigators go after preparers of false tax returns with a fury.
Tax evasion itself is a federal felony and could result in a 5-year prison sentence and a $250,000 fine. Technically, it is called ‘tax perjury’ when an individual purposefully falsifies their own tax forms. However, if someone, as in the case above, assisted you in making these false claims, then they are guilty of the same crime. Felony penalties for tax perjury are harsh, you can expect, even if you only assisted, to spend up to 3 years of incarceration in a federal prison and pay a fine of $100,000.