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The Real Price of Tax Fraud

Whether this is your first tax season, or your 21st, I’m sure you’ve encountered attempts at fraud in one form or another.

It’s hard to maintain your competitive edge in this industry, and sometimes it may seem like cutting a few corners can help you get a leg up; it’s a victimless crime anyway, right?

The Real Price Of Tax Fraud


Well, since it’s induction in 2012, the IRS Criminal Investigation Division has been involved in $6.8 billion in fraudulent refunds claimed. That’s $6.8 billion taxpayer dollars that could be going toward that new park down the street from your house, or repairing that pothole that surprises you every morning on your drive to work.

That’s enough to send 715,789 people to Disney World for a day, or buy 971,428 kegs of beer. When you start to think of it in those terms it’s easy to see the seriousness of tax fraud.

If thinking about all of those people that didn't get to go to Disney World wasn’t enough, think about this…

According to the IRS CID website, in the time from October to December of 2014 there were 824 sentences with 81% of those resulting in prison time, with an average of 40 months per sentence. It’s hard to take the family on that Disney trip when you’re behind bars.

You may feel like you’re helping out your clients by maximizing their refund amount, but in fact you’re putting them in jeopardy as well. Taxpayers are held accountable for information submitted to the IRS in their name, even if it were submitted through a preparer. You also run the risk of being reported to the IRS CID and becoming the subject of an investigation.

Still not convinced? That’s not even the worst part! If you’re working with a banking partner like Refundo, you can be sure that when you’re caught, there will be penalties.

Often times the bank will return all the funding from your office back to the IRS, and you will have to collect your fees directly from the client, and we all know how difficult that can be. Not to mention the negative reputation this can bring to your tax practice. You lose business, credibility, and peace of mind.

If you’re reading this right now and asking yourself how to make a difference, here are some options…

  • Visit the IRS website devoted to reporting tax fraud to learn about the different ways to report suspected tax fraud activity, or you can call their fraud hotline at 800-829-0433.

  • You can also contact a Taxpayer Advocate here http://www.irs.gov/Advocate.

  • You may also be eligible for a reward of up to 30% of the total proceeds collected if you report it to the Whistleblower Office within the IRS. For more information about that program, you can visit the IRS website here. 

Topics: Tax Office Tips


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