What are Criminal Penalties for Tax Preparers?

An illustration of hands on prison bars with the words "Tax Fraud" aboveAs a tax preparer, you can face stiff criminal penalties for falsified tax documents.  When the IRS notifies you of a potential penalty, it’s important to take the right steps from the beginning – including contacting a tax attorney.

Learn more about what types of issues can get you in trouble with the IRS, what types of penalties you may face, and how a tax attorney can help.

Key Insights We Will Discuss

  • Types of fraud and false statements tax preparers are held accountable for
  • Penalties tax preparers can face
  • Benefits of hiring a tax attorney

Executive Summary:

  • You can be held accountable if you knowingly submit fraudulent or false documents or statements.
  • You can face criminal penalties ranging from fines, imprisonment and suspensions for false or fraudulent tax returns
  • A tax attorney can help you navigate the charges and potential penalties.
  • Contact Ayar Law to get free, no-obligation legal advice at 800.571.7175

Types of Fraudulent and False Statements for Which Tax Preparers are Held Accountable

One of the main reasons a tax preparer can face criminal penalties is for providing fraud and false statements.  This can apply when a tax preparer commits the following:

  • Willfully makes and files a return that contains perjured information, or information he or she does not believe to be correct
  • Willfully assists, aids, or advises the preparation of a return, affidavit, claim or other document that’s false or fraudulent
  • Stimulates or falsely or fraudulently executes or signs any bond, permit, entry or other document required by Internal Revenue laws
  • Removes deposits or conceals any goods or commodities for which taxes should be imposed
  • Conceals property belonging to the estate of a taxpayer from any officer or employee of the U.S. government
  • Receives, withholds, destroys, mutilates or falsifies any book, document, or record, or makes a false statement related to the estate or financial condition of a taxpayer.

Criminal Penalties Tax Preparers Can Face

Tax preparers can face several criminal penalties.  These can include:

  • Circular 230 Penalties; Under Circular 230, the Secretary of the Treasury can censure, suspend or disbar any practitioner who is found to be incompetent, disreputable, or purposefully misleading while preparing another’s returns.
  • Civil Statutory Penalties: Tax preparers can face fines or prison time as directed by the Internal Revenue Code.  Preparers can face penalties from $1,000 to 50 percent of income derived from the return for making unreasonable understatements of tax liabilities on taxpayers’ returns.  Preparers can also face prison time, up to the IRS’s discretion, for serious fraudulent conduct.
  • EIC Due Diligence Fines: Tax preparers who don’t comply with IRS due diligence requirements imposed by the Secretary with respect to determining eligibility for Earned Income Tax Credit (EIC), or the amount of the allowable credit, must pay a $500 penalty for each failure.

Benefits of Hiring a Tax Attorney

A tax attorney can benefit tax preparers as they try to navigate IRS notifications and accusations.  Attorneys can help explain penalties, accusations, fines and potential prison time.  Attorneys can also help reduce fines, especially if they are for multiple clients, to lessen the financial obligations of the tax preparer.

Contact an Expert Tax Attorney Today

When you’re facing penalties from the IRS, call Ayar Law at 800.571.7175 to receive free, no-obligation tax advice from an experienced tax attorney.

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.