Maryland’s Commercial Law article within the Annotated Code provides certain consumer protection remedies against fraudulent tax preparers who damage their clients or others through trick, lie or stealth. Many of the victims of such preparers are low-income, low-tax-sophistication taxpayers who may be prepared to believe that, e.g., the descendants of persons held in servitude can deduct the value of 40 acres and a mule, or that income taxes are “voluntary” (they are not, though the mechanism of filing bears the tax term of art “voluntary”) , or that anyone can take the deductions of a statutory employee (don’t get me started.)
This isn’t about “honest mistakes”, forgetting one W-2, typos or areas where a cautious preparer might read a vague regulation one way rather than another. This is about greedy preparers willing to pull a hustle and commit perjury in writing, leaving their clients’ obviously (to the tax offices) bogus returns ripe for the mother of all audits, assessments and liens and worse. In an extreme case the Criminal Investigation Division gets involves and accuses the taxpayer of fraud. CID is more or less the Tax FBI; some wear body armor, carry 9mm Berettas (or used to) and have special parking spaces at some IRS tax audit offices. Let’s hope that CID gets a lot of overtime putting service weaponry into the faces of fraudulent preparers; if only they could perp walk a few out of sports arenas with 2,000 cameras watching.
Often, the taxpayer is hearing what he or she desperately wants to be true – a complete scamtastic lie from the preparer, told to the taxpayer in order to get the deal done and his or her fees paid. As for the preparer, he or she may be a person of considerable social stature; I have seen with my own eyes scamtastic returns (on audit, 18 months later) signed by a retired military officer who went into the preparation business and covered his website with self-righteous military references. (I won’t name the branch, but am glad that their ranks are one dirtbag “fewer.”) No doubt that ministers are doing the same elsewhere because they have a similar position of trust. Who is left holding the non-dischargeable tax penalty bag? An elderly homeowner in West Baltimore, a young couple in Anacostia, DC, trying to build a future, a young woman hoping to get her nursing license and not needing a lien from the State against her when she files for her license.
Next week I will be attending a seminar put on by Civil Justice, Inc., of Baltimore (which I joined several months ago) on how to go after fraudulent preparers. It’s a free seminar but this information is of great value.