Mar 26, 2026
Stephanie Murrin believed she was doing the responsible thing by hiring a professional to handle her taxes. Now she’s fighting the IRS over a $328,000 tax bill tied to returns filed back in the 1990s (1).
The man who prepared them, Duane Howell, allegedly inflated deductions and fabricated expenses to boost refunds and line his own pockets. Howell, whose license had already been suspended for previous fraud convictions, allegedly inflated deductions and fabricated expenses across dozens of clients, generating roughly $10 million in fraudulent write-offs.
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But that wasn’t enough to exonerate Murrin. The IRS argues that fraudulent returns, even if prepared by a third party, allow the agency to assess taxes at any time, leaving Murrin liable for the resulting bill.
At the heart of the case is a legal gray area: whether the IRS can pursue taxpayers indefinitely based on a preparer’s fraud even if the taxpayer had no intent to evade taxes.
Murrin’s case highlights a troubling reality for taxpayers: if you hire a financial professional and they do something wrong, there’s a good chance you’ll have to pick up the tab. Here’s how often authorities are uncovering similar fraud, and what you can do to avoid it.
Tax preparer fraud is rising
Murrin’s story may sound extreme, but it’s not an isolated case. According to the IRS, criminal investigations into fraudulent tax preparers rose from 93 in 2023 to 127 last year (2).
While most accountants operate legitimately, some go rogue and exploit complex tax rules for personal gain. Often, that involves manipulating the ability to deduct expenses from income or claim certain credits.
Another example involved Florida financial advisor Stephen Mellinger III. Prosecutors said Mellinger, who was sentenced to eight years in federal prison, encouraged clients to make so-called “royalty payments” that were deducted as business expenses. This money was then circulated through accounts controlled by the conspirators before being returned to the clients, minus fees (3).
The scheme reportedly cost the IRS about $37 million in lost tax revenue and saw
Mellinger and an associate collect roughly $3 million in fees. On top of that, the pair also reportedly stole more than $2.1 million from some of these same clients.
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Elsewhere, in Memphis, tax preparer Rebecca Gilley admitted to submitting more than 1,000 tax returns that claimed bogus credits on behalf of clients who had no idea what she was doing. The filings requested more than $9.25 million in credits**,** including pandemic-era sick and family leave credits that many clients were not eligible for (4).
Fraud can also extend beyond tax preparation into broader financial advisory services. In another IRS case, a former financial advisor was sentenced to 12 years in federal prison for stealing more than $5.5 million from client accounts using fraudulent transfers and forged documents (5).
Again, this isn’t just a one-off. Regulators say misconduct among investment advisors is a persistent concern, with the Securities and Exchange Commission (SEC) bringing more than 90 enforcement actions against them in fiscal year 2025, according to a legal review of the agency’s enforcement activity (6).
The problem isn’t just that trusted professionals sometimes deceive their clients. Perhaps more worrying is that when authorities eventually uncover the fraud, clients can find themselves facing penalties and sometimes massive tax bills tied to filings they didn’t even realize were inaccurate.
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How to protect yourself from fraudulent tax preparers
Credentials alone aren’t always a guarantee of trustworthiness. As many victims have discovered the hard way, it pays to be cautious.
According to the IRS and tax experts, here’s what you should look out for (7, 8):
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- Promising unusually large refunds, charging fees based on the size of them and getting refunds sent to their own accounts.
- Encouraging clients to claim deductions or expenses they can’t properly document.
- Asking to be paid only in cash.
- Operating without a physical office or verifiable business address.
- Asking clients to sign a blank or incomplete tax return.
- Refusing to provide a copy of the completed return.
- Failing to show their Preparer Tax Identification Number (PTIN) and include it on filings.
Generally, if the professional dodges questions, lacks transparency or promises results that seem too good to be true, it may be wise to look elsewhere.
You also shouldn’t automatically take their word for it. When possible, verify what they say by reading contracts and looking them up online. Murrin’s accountant was operating on a suspended license when she met him and already had a history of suspicious activity, which he, of course, didn’t disclose.
Fortunately, there are ways to independently verify credentials. Use state boards of accountancy to verify CPAs, and check investment advisors through SEC or FINRA databases, which show licensing status, employment history and any disciplinary records.
It’s also wise to ask for clear documentation upfront, including a written engagement agreement, a transparent explanation of fees and a detailed outline of any tax strategies being proposed.
If something feels off, trust your instincts. High-pressure sales tactics, vague explanations or reluctance to answer questions can all signal that a financial professional may not have your best interests in mind.
As Murrin’s case shows, the implications of trusting the wrong advisor can be disastrous. Taking the time to verify credentials, read paperwork and look out for warning signs early could help ensure you don’t end up paying for someone else’s fraud.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
MarketWatch (1); IRS (2, 3, 5, 7); Hoodline (4); Sidley Austin LLP (6); KDA Inc. (8)
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Daniel Liberto is a financial journalist with over 10 years of experience covering markets, investing, and the economy. He writes for global publications and specializes in making complex financial topics clear and accessible to all readers.
