A federal jury in Arizona found Darlene Musgrove, 68, of Tucson guilty on October 5 of 22 counts of preparing false federal income tax returns for her clients, the U.S. Attorney’s Office for the District of Arizona announced on October 6. Twelve of her clients testified at trial that they did not have the deductions that were put on their returns. The Justice Department puts the tax loss at about $127,166.
What the jury decided
Musgrove was a paid tax preparer. She was convicted on 22 counts of aiding and assisting in the preparation of false returns. Prosecutors say she added deductions the clients did not have so that their refunds would be larger and they would keep coming back. The clients who took the stand told the court they did not know about the deductions and that their refunds had been larger than in past years, according to the release.
The conviction is a jury verdict, and she has not been sentenced. Sentencing is scheduled for February 23, 2027, before U.S. District Judge Raner C. Collins. The charge of aiding and assisting in preparing false returns carries up to three years in prison and a $100,000 fine. The release does not name a business, and it does not say which deductions appeared on the returns. The case was investigated by IRS Criminal Investigation and prosecuted by the U.S. Attorney’s Office in Tucson.
That leaves a practical question for anyone who has ever had a return prepared by someone else: how to tell whether it holds a deduction that was never theirs.
Twelve clients in this case told a jury that deductions they never had appeared on their returns, and a return that gets corrected brings IRS letters with it. The IRS Refund Recovery Kit includes a notice decoder for reading those letters and a refund status tracker spreadsheet for following a changed refund.
Read an IRS notice about a corrected return with the Refund Recovery Kit’s notice decoder →
What it means for the clients’ money
A jury found that the returns were false, and a false return can understate tax. The IRS says that taxpayers are ultimately responsible for all the information on their income tax return, no matter who prepares it. For a client whose return carried deductions they never had, that raises the prospect of a bill for the difference between the refund received and the refund the true numbers supported. The Justice Department release does not say whether the IRS has contacted Musgrove’s clients, how many returns it plans to examine, or what any client will owe.
Which lines on a return depend on personal facts
Deductions that rest on a personal fact are the easiest to check against your own records. For the 2025 tax year, the IRS says the four new deductions all go on one form, Schedule 1-A. Under the IRS’s summary of the new law, they are tips up to $25,000, overtime up to $12,500 ($25,000 on a joint return), a senior deduction of $6,000 ($12,000 for a couple) that phases out starting at $75,000 of income ($150,000 joint), and car loan interest up to $10,000. A client who never received tips or overtime has an easy test for whether those lines belong on a return. The release does not say which deductions Musgrove used.
Pulling an IRS transcript and reading it
The IRS lets taxpayers see what was filed in their name. On its Get Transcript page, the agency recommends the online route as the fastest, through an Individual Online Account. A transcript by mail takes five to 10 calendar days, the automated phone service is 800-908-9946, and Form 4506-T requests other transcript types by mail. The page lists tax return transcripts and tax account transcripts among the types.
Put the transcript next to the copy of the return the preparer handed over and the year’s pay stubs, W-2s and 1099s. Look at the refund amount, then each deduction and credit. Anything that appears on the transcript without a matching fact in the household’s records is worth a question to the preparer in writing.
The IRS also tells taxpayers to review a return before signing and ask about anything unclear, and to never sign a blank one. Someone who suspects a preparer filed or changed a return without consent can file Form 14157-A, the preparer fraud or misconduct affidavit, and a complaint about a preparer goes on Form 14157.
A corrected return changes the refund and brings letters
If a return turns out to include a deduction the taxpayer never had, the refund shifts and IRS notices follow. The IRS Refund Recovery Kit pairs a notice decoder with a refund status tracker spreadsheet, so each letter and each changed amount can be logged in one place.
Log a changed refund and each IRS reply in the refund status tracker spreadsheet →
This article was produced with AI assistance and edited for accuracy against the sources linked above.
