In Fiscal Year 2002, 254 investigations were initiated, compared to 116 the year before. More cases were referred to the Department of Justice for prosecution -- 89 in FY 2002, up from 73 the year before. Preparers convicted of tax crimes received longer average prison terms -- 27 months in FY 2002, up from 20 months the year before.

Additionally, there has been a significant increase during the first quarter of fiscal year 2003 in the number of criminal investigations referred to the Department of Justice for prosecution regarding accountants -- from 12 in the first quarter of 2002, to 28 in the first quarter of 2003.

"We are seeing more and more activity involving unscrupulous tax preparers," said David Palmer, Chief, IRS Criminal Investigation. "We urge taxpayers to take some simple steps to avoid being snared by a person selling bad tax advice."

In recent criminal investigations, the IRS has found that abusive return preparers derive financial benefit from the fraud in a number of ways, including diverting a portion of the refund for their own benefit, charging inflated fees for the return preparation services, and increasing their clientele by advertising guaranteed larger refunds.

"The vast majority of return preparers are honest and reputable," said Palmer. "Those who aren't can create considerable financial problems for their clients, so taxpayers really need to choose carefully when hiring a preparer."

Whether a tax preparer simply makes an error or intentionally commits fraud, it is the taxpayer who actually owes the tax and any penalties and interest on the taxes owed but not paid. The IRS recommends that taxpayers ask the preparer about their training, experience and current knowledge of the law, and find out if the preparer can represent taxpayers in an audit (only Enrolled Agents, Certified Public Accountants and lawyers are authorized to represent taxpayers before the IRS).