Many taxpayers who enjoy a big tax refund year after year may think their tax preparer is the greatest thing since sliced bread.

 

Until, that is, the Internal Revenue Service comes to eat up that refund plus a big chunk of the taxpayer's bank account.

 

Though the IRS continues to nab discreditable tax return preparers, some haven't gotten the message.   These preparers fall into three broad types:   The faker, the loser and the deductor.    Samuel Aragbaye is an example of a faker.   He filed more than fifteen hundred false returns, inducing the government to pay him more than $551,000 in refunds.    The California resident had falsely claimed deductions using names of indigents receiving state aid and names listed on Children's Social Services lists.    He furnished an independent payroll company with 35 of those names and social security numbers showing they were employees of a fictitious company.    This generated IRS tax withholding forms for returns he filed.    He used 141 different addresses to receive refund checks.

 

Aragbaye was sentenced to 78 months in prison.

 

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Brenda Kay Scarberry is an example of a loser.    Two years before she and Tony Scarberry, Jr. divorced, she prepared and filed a joint return for them.    On the return, she claimed her husband lost $11,160 in his carpet installer business.    Her husband, however, didn't own the carpet business; he worked only as a helper.    As such, he wasn't entitled to a business loss deduction.    According to his testimony, after their divorce, he didn't furnish her any information or documents concerning a business loss.

 

She prepared and filed another joint return for the same year.    This one was for herself and Craig Raymond, whom she later married.    She used her maiden name, Brenda Jordan.    Later in court, she said she didn't consider filing a second joint return a major factor.

 

In her return preparation business, she prepared a return showing that Monte Hamman had lost $6,710 on his cattle ranch.    Truck driver Hamman had no ranch, nor did he understand she was deducting a loss for one.

 

What did she get for her efforts?    A 15-month prison sentence.

 

 

Charles J. Payton from North Carolina is a deductor.    He had a reputation for getting refunds.    It's easy to see why.    His employee Ollie Maye said Payton directed Maye to arbitrarily deduct percentages of adjusted gross income for certain expenses, like 20 percent for medical and 10 percent for donations.

 

Payton was sentenced to 78 months in prison.                                                                                        

 

THE MORAL:   He who steals my purse steals trash, but he that filches my good tax return robs me of that which does not enrich him but makes me poor indeed.

 

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Because of unscrupulous preparers, clients suffer.    When the IRS spots one, it routinely demands client lists.    It then bills the clients for tax underpayments plus interest.

 

PLANNING TIP:   You should be wary of a preparer who refuses to sign

your return or who claims:

• Taxes are unconstitutional;                                                                                                                                
• Payment of taxes is voluntary;
• He can get you a large refund;
• You can get a credit for past slavery or for land stolen from American Indians.
  
  

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