Can I get in trouble for someone else's tax fraud?

Question

Here's the deal. I got hired as a tax preparer for a CPA. I've never done people's taxes and they're just showing me the basics. Sometimes, they hand me a return that is pretty much finished except one or two things that I add. In the end, I need to initial as tax preparer. If they are lying about certain things, can I be held liable? Someone is supposed to review it after me, but I don't know if that gets done. If the IRS does an audit, and I initialed as preparer...can I be at fault?! I mean, how does someone legitimately write off $40k of furniture put in their 'home office'? And I'm filling out forms to transfer a dead person's life insurance policy into my company's name (as executors). Somehow, I don't feel it's going to go to her family. And a dead couple overpaid their taxes and were due a few thousands. How do I know that money is going to the son? What should I do?

Answer 1

I'd look for another job.  Yes, if you sign as preparer, you could be held responsible although the main burden would go back to the taxpayer.

Answer 2

You said you "initialed" as paid preparer. Did you put your signature on the line that says paid preparer signature?  Did someone sign after you initialed it?

If you signed as paid preparer, then you are signing that everything on the return is "true and correct" under penalty of perjury.

If someone else signed the return, then they are swearing to the accuracy of the return, not you.

I, personally, would never sign a return that someone else put figures on unless I knew they were correct.

Answer 3

You are in a vulnerable position because you do not have the tax knowledge to make a judgement.  If you are serious about tax preparation, take a course.  

This on-the-job training doesn't seem effective for you.  You do not have confidence in the integrity of the others in the office.

In the meantime, it is OK to initial intermediate reports.  But if they ask you to sign as preparer and you didn't prepare the return, you can say "I'm sorry, I don't understand this return well enough to sign."

In practice, I doubt if they will ask you to sign a tax return until you are the one preparing the return.  Unless you sign as the paid preparer, you cannot get in trouble for inaccuracies in the tax return.