Return-Preparer Fraud

Tax preparers occupy a position of trust. When prosecutors believe a preparer knowingly prepares, causes, or assists in the filing of false returns to obtain refunds, inflate deductions, or hide income, the government pursues criminal charges aggressively. These investigations commonly target accountants, enrolled agents, payroll firms, and commercial tax-preparation businesses as well as lone practitioners.

What is Return-Preparer Fraud?

Criminal return-preparer fraud covers situations where a preparer willfully causes or assists in filing false or fraudulent tax returns or refunds. Prosecutors focus on the preparer’s knowledge and intent: did the preparer know the positions were false, and did they willfully assist a scheme to obtain unlawful refunds or reduce tax liabilities?

Common charged theories include:

  • Aiding and assisting in the filing of false returns (26 U.S.C. 7602(2))—the preparer advises, prepares, or causes a false return to be filed with knowledge of falsity.

  • False statements/false declarations on returns (26 U.S.C. 7206(1))—where preparer signs or certifies false statements (when applicable)

  • Mial or Wire Fraud (18 U.S.C. 1341, 1343)—where interstate communications are used to submit false returns or funnel funds.

  • Tax Evasion (26 U.S.C. 7201)—where the preparer was a knowing participant in an evasion scheme.

  • Conspiracy (18 U.S.C. 371)—coordinating with clients, co-preparers, or promoters to defraud the IRS.

Typical Fact Patterns

  • Preparing returns that claim credits (EIC, advanced credits, payroll credits) where the preparer knew the underlying facts were false.

  • Systematic inflation of business expenses or fabricated Schedule C losses across many clients to generate refunds.

  • “Bulk” filing operations where preparers or staff harvest SSNs and file fraudulent returns.

  • Preparers who market aggressive shelter products and coach clients on how to present false documents to support positions.

  • Preparers who create or accept sham invoices, fake payroll records, or fabricated receipts to justify deductions or credits.

Tax-preparer fraud prosecutions are serious and often built on substantial documentary and digital evidence. But prosecutors must still prove willfulness beyond a reasonable doubt. When the stakes are high, a target may avoid the harshest outcomes of this charge—or beat the case outright—with early counsel, a controlled internal investigation, targeted forensic work, and a strong defense.