Sometimes you get a better result (tax-wise) if your income is higher. That’s because of refundable credits like the Earned Income Credit. Now, I can’t change a client’s income so that they will qualify for a credit; your income is whatever it is. Unfortunately, not everyone is ethical.
Let’s head to Michigan, where Chad Chertos and Gregory VanDyke had a business called “The Tax Guys” or “Integrity Tax.” The latter name may have been reflective of the legal name of the business but it appears not to reflect how their business was conducted. Back in October the pair was indicted on charges of conspiring to defraud the United States and presenting false claims. Today, Mr. Chertos pleaded guilty to the conspiracy charge. This news story states that Mr. VanDyke was also going to plead guilty.
The method allegedly used by the pair was to inflate income so that they would qualify for tax credits; they allegedly charged a percentage of the refund as their fee. Charging a percentage of a refund is specifically prohibited by Circular 230 (the governing document for the conduct of tax professionals). The Department of Justice stated that the defendants had some clients sign blank tax returns!
In any case, the pair will likely spend some time at ClubFed. They both will need to make restitution of just over $240,000 each.