As Tax Deadline Nears, IRS Warns Of Tax Fraud Schemes On The Rise
DENVER (CBS4) - With the tax return deadline looming, the IRS wants to warn the public of an increase in tax fraud schemes. The agency says it's seeing an increase in fraud and phishing scams at a rate it hasn't seen in a decade.
These scams can cause a world of hurt for taxpayers who aren't careful, because at the end of the day, you're responsible to pay the IRS, even if you're a victim of fraud.
"When you sign for the tax return to be sent in, the ultimate liability is on the taxpayer," said Special Agent In Charge Andy Tsui of IRS Criminal Investigation in the Denver Field Office. "So, if there's an issue with the tax return, if you get more money than you're entitled to, you have to pay it back."
Tsui says shady tax preparers are one of the tax fraud schemes IRS investigators see regularly.
Thursday in Denver, Jimmie Lucero, of Lucero Tax and Accounting Services, was sentenced to three years probation for scamming clients on their tax returns. While a full restitution amount will be determined in a separate hearing on April 28, the IRS said in a statement he could be liable for over $233,000 in restitution.
"Mr. Lucero's case serves as an example to other tax preparers that IRS Criminal Investigation remains vigilant and will aggressively pursue individuals who attempt to defraud our tax system," IRS Criminal Investigation said in an email to CBS4.
In 2021, IRS Criminal Investigation initiated 1,372 investigations into tax crimes including tax fraud and refund fraud.
The IRS says Lucero fabricated his clients' business expenses and charitable contributions to get falsely inflated refunds without his clients knowledge.
"That case is a really good example of a tax preparer putting additional expenses on a tax return without taxpayers knowing," Tsui said.
Lucero's attorney said she could not comment on the case, as Federal public defenders are prohibited by law from speaking publicly about their clients' cases.
Tsui says "ghost preparers" are also a big issue. Those are preparers who don't put their information on a client's tax return before submitting it to the IRS.
"In actuality, the taxpayer... they may be getting a larger refund thinking that this is a tax professional legitimately getting them a larger refund, and they go through the process, think it's a normal situation, then the version that goes to the IRS will have those fraudulent items on it, and it makes it look like no one prepared it except the taxpayer," Tsui explained.
Tsui says it can be difficult to track down ghost preparers, and victims of fraud won't get their money back unless the criminals are caught.
So, the IRS stresses it's important to get a copy and review your tax return before allowing a preparer to send it in.
"Have the tax preparer go over the return with you," Tsui said. "If there are promises of large tax refunds, that's definitely a red flag."
Tsui also warns about fraudsters calling, emailing, texting, and messaging on social media pretending to be with the IRS to scam people out of money.
Federal Trade Commission data shows in 2021 there were 4,369 reports of those scam calls nationwide, resulting in $2.64 million in total losses.
The IRS will never contact you over social media or text message, and will never call you threatening legal action... so, hang up if you receive one of those calls and report it.
The tax deadline is April 18.
If you think you've been a victim of tax fraud, report it to the IRS immediately. If you believe your tax return may have been incorrect or fraudulent, Tsui advises you to work with a legitimate tax specialist to fix and amend your return to avoid any penalties or interest fees on debt owed to the government.
Find a full list of recommendations and resources to prevent and report tax fraud.
