Her accountant went to prison. Now the IRS is coming after her for $328,000.

MW Her accountant went to prison. Now the IRS is coming after her for $328,000.

Andrew Keshner

The case goes back decades. It's a cautionary tale about choosing a tax preparer.

A woman who inadvertently hired a crooked accountant is down to her last shot in court to fight a massive tax bill. Her story is a reminder that the IRS can come after taxpayers decades later - even if they didn't know their tax preparer was doing anything illegal.

About three decades ago, an accountant profited from dubious deductions he put on the tax returns of an unsuspecting client.

Now the client could owe the IRS more than $328,000 in taxes, penalties and interest for crimes her tax preparer committed using her and others - and she's down to her last shot at avoiding the bill.

The client, Stephanie Murrin, is asking the U.S. Supreme Court to hear her case after two lower courts sided with the Internal Revenue Service.

Murrin did not intend to evade taxes when she hired the accountant to prepare her return back in 1993, government lawyers have acknowledged. Nevertheless, she could still be on the hook for her accountant's fraudulent actions, they say. In recent years, IRS criminal investigators have launched an increasing number of probes into questionable refunds in cases similar to Murrin's.

Murrin's lawyers say she shouldn't be forced to pay, according to a petition they filed last week. The stakes are high for her and anyone else who may be unaware that their tax preparer cut corners or committed fraud - even if it happened decades ago, the court papers said.

"Those taxpayers are left to defend their tax returns when the government suddenly appears unannounced, out of nowhere, asserting massive tax liabilities from decades earlier," the filing said.

"And the insult added to that injury is an innocent party's financial life can be turned upside down based on someone else's fraud - conducted in the far-off past and entirely unbeknownst to the law-abiding party."

'Taxpayers are left to defend their tax returns when the government suddenly appears unannounced, out of nowhere, asserting massive tax liabilities from decades earlier.' Stephanie Murrin's Supreme Court petition for a writ of certiorari

While Murrin is fighting her case, many people left in a jam by their tax preparer just pay the IRS and try to get on with their life, said Nina Olson, the former IRS national taxpayer advocate.

Murrin's case highlights pitfalls that lurk when people entrust someone with their taxes, according to Olson. "They don't have a way to know if this preparer is better or more competent than another preparer," Olson told MarketWatch.

In fact, most people paid to handle tax returns are not lawyers, accountants or enrolled agents, according to a watchdog report from the U.S. Government Accountability Office released this week. This exposes taxpayers to errors and consequences from uncredentialed preparers - and these preparers are generally not subject to IRS regulation, the report said.

A bipartisan bill released Thursday would toughen penalties against preparers who improperly handle returns. It would also protect their clients from being audited years later because of their preparer's fraud.

The IRS and an attorney for Murrin declined to comment on the case.

How Murrin ended up staring at a six-figure tax bill

Court papers don't specify how Murrin and her then husband came into contact with the accountant - but the man already had a troubled past by that time.

When Duane Howell began preparing the Murrins' returns in 1993, his accountant's license had already been suspended after a 1986 conviction in New York federal court for preparing fraudulent tax returns. The Murrins didn't know about Howell's history, and they used his services through 1999.

In 2006, New York federal prosecutors indicted Howell and his employee. Howell and his worker, then based in Palm Beach, Fla., had inflated their clients' write-offs and fabricated expenses for years, prosecutors alleged in the indictment.

The moves lowered the clients' taxable income and increased the size of their tax refunds. The pair charged their clients fees for all the extra paperwork and sometimes took one-third of a client's refund payment as compensation, according to the indictment. Howell omitted his name from his clients' tax returns and listed different "preparer" entities in an attempt to avoid IRS scrutiny, according to court filings.

All in, Howell and his employee generated approximately $10 million in fraudulent expenses and deductions, according to prosecutors. The scores of questionable tax returns were filed between 1992 and 2003.

Howell, then age 72, pleaded guilty to two charges including conspiracy to commit tax fraud. He spent just over a year in prison starting in 2009, according to court and prison records. The outcome included a court order to pay $1.2 million in restitution to the IRS. Efforts to reach Howell or his attorneys were unsuccessful.

It's not clear when Murrin learned of Howell's conviction, but it could have been in 2019. That's when the IRS told her she owed more than $65,000 in unpaid taxes and around $13,000 in penalties for filing inaccurate returns.

On top of that, the IRS said Murrin - like anyone with an unpaid tax bill or penalty - would have to pay interest on the money she owed. The years of interest piling up on the owed taxes and penalties could amount to an estimated $250,000, according to Murrin's court papers.

Why did so much time pass before the IRS came looking?

The IRS generally has three years to inspect a return for accuracy once it's been filed. But the agency can dig into a tax return at any time if a false or fraudulent tax return was filed "with the intent to evade tax," according to the tax code.

Murrin's lawyers say the IRS only has the right to look into her return if she was the one who intended to evade tax, and they say that's not the case. Their client "acted in good faith and did not know about, let alone cause any false entries on any of the returns," they wrote.

But government lawyers say the tax code never spelled out whose "intent to evade" matters. Therefore, the IRS bill was on solid legal ground, they said.

The Third Circuit Court of Appeals in Philadelphia upheld a tax court judgment against Murrin last fall. The three-judge panel said it understood Murrin's "frustration" over facing a hefty bill "due to the wrongdoing of someone other than her. But we are bound by statute."

The lower-court ruling in Murrin's case effectively forces anyone who has used a tax preparer to keep all their tax records forever, just in case the IRS comes knocking years - or decades - later, said Bryan Camp, a professor at the Texas Tech University School of Law. Camp filed a friend-of-the-court brief urging the court of appeals to side with Murrin.

The IRS has traditionally had the burden of showing that a taxpayer intended to dodge taxes, but decisions over the past 20 years have put more pressure on taxpayers to defend themselves against audits of long-ago returns, according to his brief.

This puts victimized taxpayers in a bind, Camp told MarketWatch. When the Justice Department and the IRS go after unscrupulous preparers, they often obtain plea deals in exchange for the preparer's cooperation.

"Now the IRS has that bludgeon, that cudgel, to whack a taxpayer with. Now it's up to the taxpayer to prove it wasn't fraud, and that's just backwards," Camp said.

Government attorneys have defended their approach in Murrin's case and others. "There is nothing nefarious" about the IRS taking time to build solid cases to find and collect owed tax money, federal attorneys told the circuit-court judges.

'There is nothing nefarious' about the IRS taking time to build cases to collect owed taxes, government lawyers said in court papers.

Murrin hasn't paid the bill yet. Now she's hoping the Supreme Court will intervene. If they take her case, the justices will decide whether the fraudulent acts of a third-party tax preparer should expose unknowing clients to audits that could reach years into the past.

How to steer clear of shady tax preparers

Whatever the high court does, Murrin's case is a cautionary tale for taxpayers as they file their 2025 income-tax returns. Last year, IRS criminal investigators launched 127 probes, most of which were referred to prosecutors. That was up from 93 investigations in 2023, according to statistics.

The IRS's criminal-investigation wing routinely tells tax filers to beware of preparers who promise big refunds or take a cut of their clients' refunds as payment. Trustworthy tax professionals will put their preparer tax identification number on a client's return and also provide a copy of the return for the filer's records, the IRS said in a bulletin about tax fraud. Another red flag is being asked to sign a blank tax return, it added.

"Tax fraud harms you and your community. It can lead to civil or criminal charges, put your money and personal information at risk, and reduce funding for essential community services," the bulletin said.

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-Andrew Keshner

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February 27, 2026 14:46 ET (19:46 GMT)

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