In many cases, when it comes to tax returns, if something appears too good to be true, it might very well be. Thousands of clients have learned that the hard way from a tax preparer in Chicago who claimed higher education tax credits that did not apply to them. Now, the tax preparer is facing a five-year prison term, and her clients could be on the hook for the tax problems that they now find themselves with.
The woman apparently didn’t realize any financial gain from her activities. However, her clients reaped the gains of paying less in taxes, and the government was shorted considerable sums as a result: more than $3 million over a three-year period.
Even though the tax preparer didn’t take a cut from the inflated refunds that her clients were receiving, she still garnered lots of extra business that she wouldn’t have received otherwise. Some people say that the woman genuinely believed that she was helping members of her community by filing their returns in this manner. IRS investigators, however, say that the filings still amounted to stealing from the government.
While the woman agreed to pay almost $800,000 in fines, it remains to be seen if the thousands of clients who took their business to her will have to pay back all the money that they owe. Regardless of how a tax debt is incurred, consulting with an experienced tax attorney can be valuable for people who find themselves having difficulty with federal or state tax authorities.