Another Tax Preparer Convicted

On March 23, 2010, Ms. Shantelle Mohan was sentenced to 42 months in prison after pleading guilty to one count of fraud over $5,000. Ms. Mohan prepared tax returns for her clients in which she claimed fraudulent losses related to teak tree farms located in Costa Rica. Her clients received refunds due to these losses and agreed to invest a portion of these funds to Ms. Mohan. Although Ms. Mohan is going to prison, her clients will also have their own issues with CRA.

Since the losses claimed on their returns are fraudulent, CRA will correctly deny those losses on the returns. As such, the refund that they received will have to be repaid to CRA. Further, CRA will charge interest on the outstanding amount and may also levy a penalty on the taxpayer. It is certainly possible that the interest and penalties will equal or exceed the size of the refund.

To avoid falling victim to a unscrupulous tax preparer, taxpayers should take note of the following:

• Be wary of tax preparers whose fees are based on the size of any refund, as these preparers may artificially increase a refund to increase their income.
• Be wary of tax preparers who e-file tax returns but do not provide a copy of the tax return they submitted. If this occurs, contact CRA to request a copy of your tax return.
• Be wary of tax preparers who state that they will use your funds to donate to charities. If you are suspicious of whether a charity exists, you can search here to find out.
• Finally, if something sounds too good to be true, it probably is!