The Internal Revenue Service and the Justice Department have been stepping up their efforts to investigate and prosecute tax practitioners preparing fraudulent returns.

Doug Shulman

The IRS said it has conducted more than 5,000 field visits to tax return preparers this fiscal year, and teamed up with the Department of Justice in pursuit of questionable preparers, leading to 56 indictments, 25 convictions and 21 civil injunctions since Jan. 1.

“Our efforts this tax season are part of a longer-term effort to improve the oversight of this critical part of the tax system,” said IRS Commissioner Doug Shulman in a statement. “The vast majority of tax return preparers provide solid service, but we need to do more to protect taxpayers.”

In January, the IRS sent more than 10,000 letters to tax return preparers reminding them of their obligation to prepare accurate returns for their clients, reviewing common errors, and outlining the consequences of filing incorrect returns. The letters went to preparers with large volumes of specific tax returns where the IRS typically sees frequent errors, although simply receiving a letter was not an indication the preparer had problems.

The IRS followed up with field visits to about 2,400 tax return preparers who received the letters to discuss many of the issues mentioned. Separately, the IRS conducted visits with about 2,600 other return preparers to discuss a variety of issues.

The IRS will be reviewing the results of these letters and visits to determine steps for future filing seasons.

The Justice Department has made a priority of prosecuting individuals who were hiding assets in foreign bank accounts, especially at UBS. The department has also been pursuing tax preparers who promoted various schemes such as one where they filed fraudulent documents with the IRS claiming refunds for monies that the IRS never received. The DOJ and the IRS have also been making a priority of prosecuting preparers who helped taxpayers claim fraudulent First-Time Homebuyer Tax Credits. They have also been cracking down on tax defiers and high-end tax shelters, including some formerly promoted by Big Four firms.