Tax Fraud and Forensic Accounting Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Return Preparer:

A return preparer is defined as a person (corporation or partnership) who formulates for compensation either all or asubstantial portion of thetax return. Or under the income tax provision claim a refund.

The fraud permeated by this personalnormally belongs with the misleading preparation and filing of false income tax returns. Normally tax preparer do the following frauds to deceive the tax authorities:

Overstated business or personal expenses,
False deductions,
Claim extreme exemptions or unallowable credits and fraudulent tax credits such as Earned Income Tax Credits. (EITC)

Procedures:

The tax authorities conduct the following procedures against the corporations who willfulness means knowingly committed a number of crimes such as the above.

26 US Code 7201-Attempt to evade or defeat tax.

Under this code, the government has to prove that, beyond a sensible doubt each of the three elementsinvolved in the statute which are: (U.S Government Publishing Office, 2011)

A substantial tax (deficiency) is outstanding and due;
there was an assenting effort to avoid or defeat a tax or the payment thereof; and

26 US Code 7203- Willful failure to file returns, supply information, or pay tax

Under this code, the government has to prove beyond a sensible doubt that: (Legal Information Institute)
Tax Fraud and Forensic Accounting Harvard Case Solution & Analysis

A person was obligatory to file a return,
The person failed to file the return on time required by law, and
The failure was willful.

26 US Code 7206- Fraud and False Statement.

This code is used against any person who willfully makes and promises any statement, return or another document, which is not considered as a genuine claim. However, under this code, the return must be filed and signed. Moreover, this code will be declared in the combination of Code 7201. (U.S. Government Publishing Office, 2012)

Safeguards

The corporations may apply the following safeguards to protect themselves from the above criminal exposures.

Government or tax authorities have to prove that the corporation intentionally conducts a criminal act. However,as the companiesoperate internationally, therefore,the violation relating to international operations may be defended by claiming that the company does not understand the legal duty and it will be difficult for the government to prove that the company knows it.

In code 7206 the tax authorities have to decide the materiality of the event moreover according to this code the return has to be signed. Hence if the return preparer did not sign the tax return then it may use this as asafeguard against the criminal exposure. However, in all the cases, the return preparer has to prove that the criminal act is unintentional.

What are some strategies you can employ in terms of ensuring you are value-added to a team in terms of defending a criminal case?

Accountants are considered as the critical in defending the criminal tax investigations. The existence of the accountant either hired by the client or by the lawyer maintains the privilege....................

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