My Sometimes Conservative Wife Just learned How Privatization works.

[Democrat 4 Ever]

55. Sometimes it is not tax fraud. They just don't know any better. I work for the IRS and I see it

everyday. And a lot of the time it is preparer fraud. Some preparers put anything down on a tax form trying to get more of a refund. I am working with someone right now who's preparer told him to file single and claim the dependents since his wife was a victim of ID theft it would take too long to get his refund. She then stated he would file the 1040X, add the wife and get the rest of the refund. Long story, short, the preparer did not want to wait for her preparation fee so she advised taxpayer to file a fraudulent return. His refund has been sitting and not processing close to a year now because of that little bit of nonsense.

Another preparer (not the same one) advised a kid who works at a convenience store to claim all of his mileage to and from work and all meals he ate while at work. The unreimbursed work expenses totaled more than $3,000.00 more than he made that year! He also claimed his girlfriend's child as a dependent, tuition tax credit (he didn't go to school) and real estate mortgage interest and taxes although he lives at home with him mother and doesn't own anything. Had him all ready to receive a $9,000.00 refund and was very disappointed when he realized it wasn't coming.

There are thousands of great preparers out there but there are a lot of fraudulent ones who have gotten away with this in the past. And there are plenty of fraudulent filers who just want to milk the system. But I have found - on a daily basis - more taxpayers want to be compliant, pay the tax that is due and want their refunds.

Computer records and cross checks are making it much harder to file a bad return but the result is thousands and thousands of returns reject and sit on a desk waiting for an employee to slowly dig through the pile trying to verify, correspond with the taxpayer, get corrected returns, etc., etc, etc,. And due to the scope of the problem it just snowballs.

The IRS has been hit for the third straight year of significant budget cuts (including furloughs), they are not back filling positions when people retire, our workload has exploded and our resources are much more limited. The IRS is no longer assisting low income people with preparing their returns, they can't, they don't have the staff. So they are referring them to tax clinics, AARP, VITA sites. Unfortunately a lot of them will end up at a fly-by-night preparer who files the return, charges an outrageous fees (I've seen charges of over $500.00 for a 1040EZ!) gets the refund deposited into their bank account and close down for the year and disappear if there is a problem. There were over 600,000 known cases of stolen ID last year alone. Only about 60% of phone calls going to the IRS toll-free help lines are answered due to the call volume and it is getting worse.

And one final piece of advise - every single taxpayer signs their return - the jurat - under penalties of perjury that their return is true and accurate. It doesn't matter if it was electronically filed, paper return, it is the taxpayers neck that is on the line if there is any funny business going on. Don't blindly sign anything put before you, go over it, ask questions and if something looks questionable - don't sign and submit until you verify. And DON'T SUBMIT your return more than once if it is accepted. This automatically kicks it out and puts it in a limbo hell - the computer sees two returns and bam, they are gone - both of them.

Edit to add link - Pub 17 is a great resource - http://www.irs.gov/pub/irs-pdf/p17.pdf