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Taxpayers may be innocent victims in tax crimes

Like other people across the country, when Massachusetts residents do not know how to do something, they often turn to someone who does. For instance, fixing an electrical problem, treating an illness and even preparing their tax returns often require some help. People rely on those with the knowledge and experience in certain areas to handle matters on their behalf. When it comes to preparing taxes, the person someone relies on could potentially end up committing tax crimes. What happens to the taxpayers?

Recently, an accountant in another state was indicted for allegedly filing false federal income tax returns. The 10 tax returns involved in the alleged crimes yielded large refunds or reduced tax liability for the clients. The clients paid at least $250 for the accountant's services and probably passed his name on to others since they were satisfied customers.

As it turns out, the Arizona accountant provided his services to numerous federal law enforcement officers, many of whom work for the Border Patrol. The favorable tax outcomes appear to have occurred using Schedule A, which allows taxpayers to list expenses not reimbursed through employment. The indictment indicates that the expenses in the questioned tax returns were not backed up by receipts or were made up and/or inflated.

While an accountant faces charges for tax crimes, the taxpayers involved may also find themselves in hot water with the IRS. They entrusted the preparation of their federal income taxes to someone they thought would obey the law, but that may not turn out to be the case. They could also end up facing some sort of repercussions and may need to take steps to protect themselves. Massachusetts residents who discover their tax preparers may have committed tax crimes may want to do the same.

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