More Grist for the Mill

There’s a debate over whether licensing tax professionals will do any good. California requires all tax professionals to have licenses, and we have plenty of Bozo tax preparers.

In any case, out of Edgewood, Maryland comes word that there is one less bozo professional out there. Arnold Wood prepared returns, but he liked to give his clients bonuses. Like Western Tax Service, Mr. Wood didn’t see a deduction or credit that he couldn’t take for his clients. Who needs to actually make charitable contributions to take a deduction for charitable contributions? Certainly not Mr. Wood’s clients!

Though the story doesn’t mention how the IRS discovered the secret of Arnold’s Tax Service, they did. They weren’t as pleased as Mr. Wood’s customers. Well, Mr. Wood’s customers weren’t pleased either when they discovered that they actually had to make charitable contributions to take a deduction for them.

Mr. Wood didn’t stop with others; his own tax returns featured the same combination of phony credits and deductions. While Mr. Wood’s own return featured only $45,000 of phony deductions, the overall scope of the fraud was significant. The phony refunds were between $1.5 million and $1.8 million for 2006 -2008.

Like all good things–and all bad things–Mr. Wood’s business went through a change. Those business cards that said he’d get more for yourself and had pictures of money are now a thing of the past. Mr. Wood pleaded guilty and will serve two years at ClubFed and must make restitution of $45,000. Mr. Wood’s customers are receiving “Dear Soon to be Audited Taxpayer” letters and will, if they haven’t already, be paying the true amount they owe.

As usual, the moral of the story is that if someone tells you that he can always get you a refund run, don’t walk, in the other direction.

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