In July, a Miami man pleaded guilty to filing a false tax return. He’d filed returns for himself and for several trusts he controlled, reporting income the trusts never earned and tax withholding that was never paid. Together, those returns asked the IRS for more than $4.2 million in refunds.
He’s scheduled to be sentenced in October and faces up to three years in prison.
Cases like this almost always start with a pitch.
The Pitch
Someone tells you there’s a way to get back a lot more than you expected. Maybe it’s a preparer who says he knows something the others don’t. Maybe it’s a seminar, a Facebook group, or a video about a trust structure, a special filing, or a provision that lets you recover taxes you supposedly overpaid years ago. There’s usually a line in there about how this is what wealthy people do and nobody tells the rest of us.
The return gets filed. You sign it. And for a while, nothing happens.
Why It Comes Apart
The IRS matches your return against what your employer, your bank, and every other payer already reported. Withholding that was never paid is one of the easiest things in the system to spot. That’s why these cases so often end in a courtroom instead of a correction letter.
When it unwinds, the promoter isn’t the one holding the bill. You are. That can mean paying the refund back with interest, a civil fraud penalty of up to 75% of the underpayment, a $5,000 penalty for a frivolous return, and, when the IRS believes you knew, a criminal referral.
You signed the return. That signature says the information on it is true, and it belongs to you no matter who typed it.
Signs You Should Slow Down
- A refund amount promised before anyone has looked at your documents
- A fee calculated as a percentage of your refund
- A preparer who won’t sign the return or give you their PTIN
- A refund routed anywhere other than your own account
- Any strategy explained as secret, suppressed, or something the IRS doesn’t want you to know about
- Being told not to ask questions, or not to keep a copy
If You Already Signed One
You’re not the first, and coming forward on your own puts you in a much better position than waiting for the IRS to find it. Amended returns, voluntary disclosure, and penalty relief are all on the table, and which ones apply depends on how much time has passed and what the IRS already knows.
Doing nothing is the one option that gets worse every month.
How We Can Help
If you’ve received an IRS notice about a refund or an audit, or you’re worried about a return someone filed on your behalf, call us before you respond to anything.
At Ron Friedman CPA, we review prior filings, deal with the IRS on your behalf, correct returns where correcting them is the right move, and work out a plan to get you back in good standing.
Contact Ron Friedman CPA today for a confidential consultation.
