Aiding and Abetting Fraud by Filing False Tax Returns

Can a Tax Preparer Be Held Liable?

Sandra S. Benson, JD

This year, there are almost 690,000 federal tax preparers in the United States, according to the IRS (“2014 PTIN Renewal Period Underway for Tax Professionals,” Oct. 31, 2013). In preparing returns, tax preparers routinely rely on information furnished by taxpayers or third parties, which raises several important questions: Is the preparer responsible for verifying the accuracy of the information provided? Can a tax preparer be either civilly or criminally liable if a taxpayer supplies false information? Does it matter if the preparer suspects that the taxpayer's documentation is incorrect or false but turns a blind eye or relies on verbal assurances? It is important to consider the provisions in IRS Circular 230, “Regulations Governing Practice before the Internal Revenue Service,” which contain caveats to preparers' reliance on information furnished by taxpayers.