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Aiding and abetting false returns sends tax professionals to jail

On Behalf of | Dec 3, 2021 | Tax Law |

Working in finance can be a great, stable career. People will always need someone to manage their retirement investments and file their taxes. Becoming a certified public accountant or a tax preparer can be a great way to start a financial career.

However, a career in accounting or tax work also comes with certain risks. You could make mistakes that cost your clients money and ultimately damage your professional reputation. You could also find yourself caught up in criminal charges against one of your clients if the Internal Revenue Service (IRS) determines that they committed tax fraud tax evasion or any other tax crime.

If your clients intentionally underpay their taxes, you could face criminal charges for aiding and abetting a fraudulent return. What would that mean for you?

There are significant criminal consequences for a tax preparer who helps with fraud

If you know that your clients have misrepresented their income or assets, you are an accessory to their crime. In fact, you commit a crime of your own, as you must sign the return to attest to the accuracy of the information included in the return.

The more obvious the fraud or misrepresentation is, the more likely it is that the IRS will try to hold you personally accountable. Even if you didn’t derive any personal benefit beyond the basic compensation for your work, you could face felony charges.

The possible penalties include fines of up to $100,000 for individual tax returns and $500,000 for corporate tax returns. You could also face up to three years of incarceration.

Your professional license is also at risk

Tax charges don’t just potentially mean big fines and jail time. Even if you avoid those penalties by negotiating a plea deal, your professional license as an accountant could also be at risk. Certified public accountants must maintain state licensing in Texas.

Crimes involving your profession may trigger disciplinary action that could include revoking or suspending your professional license. Tax preparation professionals don’t need a license in Texas, but a conviction will likely limit what companies and clients will hire someone in the future.

Avoiding a criminal conviction because of a client’s fraudulent tax return may be the only way to protect yourself from potential criminal and professional consequences.

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