As I mentioned, National Taxpayer Advocate Nina Olson believes that if the IRS licensed all tax preparers, tax preparer fraud would evaporate. Unfortunately, that’s definitely not the case.
This past week, the US Department of Justice indicted Teresa Marty, Rebecca Bandera-Marty, and Pamela Harris of conspiring to defraud the IRS. The defendants are alleged to have filed at least 250 false individual returns claiming more than $60 million in tax refunds. From the DOJ press release:
Marty and her daughter-in-law Bandera-Marty were licensed tax preparers, and Harris was AFS’s office manager. The defendants recruited clients by claiming that they could eliminate their debts and legally receive sizable tax refunds. They billed and collected excessive fees for this service, sometimes as high as $6,000. The defendants prepared the false tax returns claiming large refunds based on fictitious Forms 1099-OID. The fraudulent returns falsely reported that a client’s total outstanding debt (mortgage, credit limit s on credit cards, student loans, auto loans, etc.) was actually interest income that the client had received from the lender that had been withheld by the IRS, and therefore, the client was entitled to a refund. [emphasis added]
There’s nothing new about this kind of fraud, and the idea that by licensing tax professionals no tax professional would commit fraud is laughable. Wherever there is money, there’s temptation to obtain it in the wrong ways. Indeed, Teresa Marty had been previously permanently barred from preparing tax returns.
Ms. Marty, Ms. Bandera-Marty, and Ms. Harris are looking at terms at ClubFed if found guilty of the charges they face.