Tax Preparer Scams and Plan Before Hiring One

Taxpayers should be intentional when selecting their tax preparers this tax season, because they are ultimately responsible for what is filed, no matter who prepared the return.

Taxpayer responsibilities:

• Ensure the tax preparer provides you with a copy of the entire return, including copies of all schedules, especially itemized deductions or credits.
• Confirm you understand your return and ask to explain any deductions, credits and wages claimed.
• Ask the preparer to sign the return and list their preparer tax identification number (PTIN).
• Review the tax return before signing and submitting to ensure numbers are correct, and schedules add up to the tax preparer's source documents.
• Request that the preparer electronically file your return for a quicker, more accurate return. Paid preparers who do taxes for more than 10 clients must file electronically.

The IRS says roughly 50 percent of tax filers used tax preparation services in 2020. While the majority are professional and qualified, there are cases where tax preparers have submitted fraudulent returns or promised larger tax refunds by making unwarranted changes to the tax return.

The following are a few examples of ADOR stopping fraudulent tax preparers:

• Michelle Schaefer, owner of MM Tax Solutions, was indicted on charges of Fraudulent Schemes and Artifices, four counts of Preparing False Tax Returns and four counts of Forgery for allegedly preparing Arizona tax returns that contained fraudulent information for tax year 2018. It is alleged that Schaefer operated a scheme in which she would knowingly create fictitious W-2s with fabricated Arizona income tax withholdings to increase tax refunds for herself and three clients. The inclusion of the fraudulent withholding amounts on its tax returns resulted in higher tax refunds.
• Virginia Ramirez-Rodriguez was indicted on charges of Fraudulent Schemes and Artifices, Preparing False Tax Returns, and Theft. The eight-count indictment alleges Ramirez-Rodriguez prepared false 2015 and 2016 Arizona personal income tax returns for six of her clients.  In doing so, she diverted their tax refunds into her personal bank accounts, resulting in approximately $1,518 in stolen tax refunds.  
• Roberto De La O was sentenced to one year of jail for preparing 118 fraudulent Arizona individual income tax returns for tax years 2014-2017. De La O reported falsified income and withholding through fraudulent Forms W-2 or 1099-Miscellaneous issued by Red Home LLC, a shell corporation, which conducted no business. De La O must pay an $18,000 fine, $46,053 in restitution, and will be placed on seven years of probation with white-collar terms.
• Connie Cozzolino, owner of Connie’s Tax Services, Richard Luttrull, and Jennifer Lohss (Drziewicki) were indicted on charges of Fraudulent Schemes and Artifices, Illegal Control of an Enterprise, 24 counts of Preparing False Tax Returns, and Forgery for allegedly preparing Arizona tax returns that contained fraudulent information for tax years 2012-2018. The alleged inclusion of the fraudulent deductions resulted in approximately $19,000 in inflated refunds and evaded taxes.

For a list of key questions to ask the tax preparer, see https://azdor.gov/e-services/selecting-tax-preparer.

ADOR recommends taxpayers with questions contact the department’s Identity Theft Call Center at (602) 716-6300, toll-free: 844-817-9691 or: https://azdor.gov/individual-income-tax-information/identity-theft.

Tuesday, February 9, 2021