Ways and Means Subcommittee on Oversight Holds Hearing on Fraud in Income Tax Return Preparation

July 20th, 2005

United States Congressman - John Linder

WAYS AND MEANS SUBCOMMITTEE ON OVERSIGHT HOLDS HEARING ON FRAUD IN INCOME TAX RETURN PREPARATION

Washington, D.C. - On July 20, the House Ways and Means Subcommittee on Oversight, of which Congressman John Linder (R-GA) is a member, held a hearing on fraud in income tax return preparation. The hearing focused on evidence of negligent and fraudulent return preparation practices by tax professionals and the statutory and regulatory structure that sets the boundaries for Federal tax practice.

According to the U.S. Government Accountability Office (GAO), more than 70 million of the 131 million tax returns filed last year were prepared by a tax professional. The IRS Criminal Investigation office and the Office of Professional Responsibility work together to hold tax professionals accountable, and the IRS has stepped up its enforcement efforts against corrupt professionals in recent years. Presently, the IRS has 343 active investigations of tax professionals, and it identified about $79 million in suspect refunds last year.

"Due to the increasing complexity of our convoluted tax code, more and more Americans are turning to tax professionals for help in preparing their tax returns," Linder said. "Unfortunately, there are some tax professionals that choose to take advantage of individuals and the Federal government and file false returns - often leading to a loss of revenue for the Federal government and penalties for taxpayers. One way this issue could be addressed is by abolishing the current tax code and shifting the Federal government's method of revenue collection from income-backed taxes to a personal consumption tax. With the enactment of a personal consumption tax, all of the time, energy, and cost devoted to complying with the tax code and in holding tax professionals accountable, would be directed, instead, towards productive economic behavior: increased savings, investment, and job growth."

Congressman Linder is the sponsor of "The FairTax," H.R. 25. The FairTax would shift the federal government's method of revenue collection from income-based taxes to a personal consumption tax and would repeal all federal personal income taxes, corporate income taxes, payroll taxes, self-employment taxes, capital gains taxes, and gift and estate taxes, and replace these taxes with a revenue-neutral 23 percent personal consumption tax on all retail sales of new goods and services.

http://linder.house.gov/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=193&Month=7&Year=2005