IRS shuts down tax preparers in Riverside

IRS criminal investigators this week conducted raids in Riverside and six other cities to shut down tax preparation businesses suspected of abusing a one-time telephone tax refund.

The Internal Revenue Service said Friday that some tax-return preparers were requesting thousands of dollars of refunds for clients despite IRS pronouncements that the tax break should be in the $30 to $60 range.

“We have seen limited but serious instances of abuse, and we’ve sent in criminal investigators to pursue the matter accordingly,” IRS Commissioner Mark W. Everson said.

Investigators served search warrants at tax preparation businesses in Riverside; Atlanta; Dallas; Tyler and Athens, Texas; Miami; and Baton Rouge, La. Agents temporarily closed businesses, seizing computers and documents as evidence.

The tax agency said IRS auditors also were visiting tax preparers across the nation who were seeking questionable telephone tax refunds.

In several instances, it said, taxpayers have put in for a refund of $30,000, and others were requesting refunds for the entire amount of the taxpayer’s phone bill, rather than just the 3% long-distance tax.

The government stopped collecting the long-distance excise tax in August and has authorized a refund of tax collected on service billed during March 2003 to July 2006.

The IRS has urged taxpayers to request a standard refund amount, requiring no documentation and ranging from $30 to $60, depending on exemptions claimed. Those basing refunds on actual taxes paid must have documentation available if the IRS questions the claim.