An individual found a tax preparer who promised him a refund of approximately $20,000 and charged him 20% of the refund amount as a fee. Probably up front as well.
The preparer attached a fraudulent Schedule C to the return, which showed a $54,000 loss, even though the taxpayer didn’t have a business, his only income was from W-2 wages.
To his surprise and dismay the IRS disallowed the fraudulent loss and slapped the individual with the accuracy-related penalty.
His argument to the Tax Court was that he should not owe the fine because of the preparer’s misdeeds not surprisingly didn’t pass muster with the Tax Court.
So if something sounds too good to be true, it usually isn’t true. Also remember that when you sign a return, you are stating that all the information provided is complete and accurate.
Bell, TC Summ. Op. 2017-63