Inaccurate tax returns could lead to federal charges

On Behalf of | Jul 17, 2021 | Blog, Federal Crimes |

The IRS requires taxpayers to provide accurate information on income tax returns. Individuals who inaccurately claim deductions and receive larger refunds may face allegations of felony tax fraud, as explained on

Arkansas filers eligible for tax credits must include the appropriate schedules with their returns. Submitting an incomplete return without the proper accompanying schedules may flag the filing for an audit.

Incorrect information could lead to an investigation

Individuals filing returns on behalf of other taxpayers owe a duty to provide accurate information about their clients’ income and deductions. As reported by the Northwest Arkansas Democrat-Gazette, a Benton County resident prepared more than 20 federal income tax returns for third parties. The returns the woman prepared, however, allegedly contained falsified entries for income, credits and deductions.

Investigators discovered that residents of Arkansas and Louisiana who hired her received larger refunds than their actual circumstances entitled them to. According to the IRS, the U.S. government lost more than $85,000 from sending those filers unjustified refunds.

A federal investigation may lead to felony charges

Local law enforcement officials made a visit to the Arkansas woman’s home to search for information to provide the IRS. Allegedly, the tax preparer misinformed the local detectives and provided false identification. Officials also found tax records for the individuals who hired her to prepare their returns. Prosecutors filed felony charges including aggravated identity theft, to which she pleaded guilty. The tax preparer also admitted guilt to one count each of false claims against the U.S. and false declaration under perjury.

Fraud related to tax returns may result in felony charges. If convicted, monetary penalties may include repaying a refund or paying at least 75% of the tax due. A defense may require a plea bargain to reduce the severity of punishments that could include incarceration.