Expect even more government scrutiny of prepares of tax returns. We don’t have nearly enough as it is already…
But volunteer tax return preparers are the next immediate targets, in light of a recent incident involving a false return prepared at a volunteer site.
A volunteer told a taxpayer he did not need to report cash income that he received. The quality reviewer concurred with him, because people in the locality were hit hard by the bad economy and needed the extra money.
Unfortunately for the preparers, the taxpayer turned out to be a undercover Treasury inspector who was checking the accuracy of returns prepared there. As a result, that site was closed, along with another one where the preparers also volunteered.
The IRS plans for more undercover visits to occur. Expect IRS to give returns done by volunteers extra audit scrutiny as well.
A new client last year gave me information to pass on to the IRS on an all cash preparer that created a fictitious business for them. They chose not to file the fraudulent return.