The Internal Revenue Service opened the 2017 tax filing yesterday, announcing that more than 153 million returns are expected to be filed this year. The tax filing deadline for this season is not April 15 – the date universally viewed as “Tax Day” – but is instead Tuesday, April 18, 2017. Taxpayers are afforded three extra filing days this year because April 15 falls on a Saturday, and the next business day (April 17) is a holiday observed only in the District of Columbia. By law, holidays observed in District of Columbia are treated as federal holidays nationwide for purposes of the filing deadline, thereby moving the tax deadline to April 18.

As is typically the case, the opening of the tax filing season was accompanied by several well-publicized enforcement actions by the Justice Department intended to warn potential tax cheats of the perils of filing a false tax return. The enforcement actions target “return preparer fraud,” previously identified as one of the IRS’ “Dirty Dozen Tax Scams for 2016.” According to the IRS, about 60 percent of taxpayers use tax professionals to prepare their returns. While the vast majority of tax professionals provide honest, high-quality service, the IRS is focused on dishonest preparers who perpetrate refund fraud by promising their clients overly large refunds utilizing unscrupulous tactics in preparing tax returns.

In the first action, the Justice Department announced that it had filed a civil lawsuit seeking to shut down a tax return preparer in Broward County, Florida. The suit, filed in federal court in Fort Lauderdale, asks the court to permanently bar the preparer, Billy Philippe, from preparing federal tax returns for others and asks the court to order Philippe to turn over a list of all the tax returns he has prepared since January 1, 2012. In its complaint, the Justice Department alleges that Philippe prepares federal income tax returns for customers that fraudulently overstate the amount of the refunds due by falsely claiming refundable credits, including the Earned Income Tax Credit (EITC) and credits for education expenses. The complaint further alleges that Philippe frequently claims fraudulently inflated wages or self-employment income in order to maximize the amount of EITC a customer claims. The IRS previously penalized Philippe over $24,000 for failure to exercise the due diligence required to claim the EITC for his customers and the failure to properly identify himself as the paid return preparer, according to the complaint. From 2011 to 2015, Philippe prepared at least 899 returns, according to the complaint. The complaint alleges that audits of 44 returns prepared by Philippe in 2014 and 2015 revealed that he claimed credits his customers were not entitled to take and/or understated their correct tax liability by more than $300,000 in the aggregate.

In the second action, the Justice Department announced that it had successfully convinced a federal judge to shut down an unscrupulous return preparer located in Sterling, Illinois. The court’s order permanently prohibits the preparer, Daria Emma Valdivia, from preparing federal tax returns for others and requires her to turn over to the IRS a list of all persons for whom she prepared federal tax returns since 2012. According to the lawsuit, the preparer routinely prepared tax returns for customers that falsely claimed unqualified individuals as dependents, such as persons who did not live in the United States or a country contiguous to the United States. The complaint also alleged that the preparer also improperly reported her customers’ filing status as “Head of Household” when the customers were ineligible for that status. The complaint further alleged that the preparer continued to engage in this conduct even after the IRS assessed her with $132,000 in penalties for similar misconduct. Finally, the complaint alleged that IRS audits of 65 returns show that the preparer underreported her customers’ tax liabilities on 89 percent (58) of them by more than $285,000 collectively.

Both press releases contain identical warnings to taxpayers to be careful in selecting a return preparer so as to avoid falling prey to a fraudulent return preparer:

The IRS is reminding taxpayers that the 2017 individual income tax return filing season begins today, Jan. 23, 2017, and there is information available on the IRS’s website. Return preparer fraud was one of the IRS’s Dirty Dozen Tax Scams for 2016 and taxpayers seeking a return preparer should remain vigilant. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

In a third action, the Justice Department announced that the owner of multiple tax preparation businesses located in Illinois, Kansas, and Missouri was sentenced to 27 months in prison for tax evasion. According to the press release announcing the sentence, the defendant, Semere Tsehaye, owned 20 Instant Tax Service franchise locations between 2005 and 2011, and during certain of those years he substantially unreported his gross receipts by providing his return preparer with fraudulent financial summaries. The defendant underreported his gross receipts by nearly $550,000 in 2010, and by over $1 million in 2011. In addition to a jail sentence, the court required the defendant to pay nearly $300,000 in restitution to the IRS.

It is well-known that the IRS and Justice Department typically increase the frequency of their press releases announcing enforcement activity in the weeks leading up to the filing deadline. In fact, academic research confirms that these agencies issue a disproportionately large number of tax enforcement press releases as “Tax Day” approaches:

Every spring, the federal government appears to deliver an abundance of announcements that describe criminal convictions and civil injunctions involving taxpayers who have been accused of committing tax fraud. Commentators have occasionally suggested that the government announces a large number of tax enforcement actions in close proximity to a critical date in the tax compliance landscape: April 15, “Tax Day.” These claims previously were merely speculative, as they lacked any empirical support. This article fills the empirical void by seeking to answer a straightforward question: When does the government publicize tax enforcement? To conduct our study, we analyzed all 782 press releases issued by the U.S. Department of Justice Tax Division during the seven-year period of 2003 through 2009 in which the agency announced a civil or criminal tax enforcement action against a specific taxpayer identified by name. Our principal finding is that, during those years, the government issued a disproportionately large number of tax enforcement press releases during the weeks immediately prior to Tax Day compared to the rest of the year and that this difference is highly statistically significant. A convincing explanation for this finding is that government officials deliberately use tax enforcement publicity to influence individual taxpayers’ perceptions and knowledge of audit probability, tax penalties, and the government’s tax enforcement efficacy while taxpayers are preparing their annual individual tax returns.

Joshua D. Blank and Daniel Z. Levin, When Is Tax Enforcement Publicized?, 30 Virginia Tax Review 1 (2010).

As “Tax Day 2017” approaches, we can expect similar — and more frequent — announcements intended to deter would-be tax cheats from filing false tax returns.