Recently in Tax Return Preparer Fraud Category

Tax Return Preparer Pleads Guilty to Filing False Tax Returns

September 3, 2013, by The McKellar Law Firm, PLLC

Mark Goldberg, (pictured below) a tax return preparer from the Bronx in New York City, pled guilty to tax fraud last month. In the indictment Goldberg was charged with 40 counts of willfully and/or knowingly inflating tax deductions for his clients, 4 counts of filing fraudulent returns of his own, 1 count of obstruction of justice, and 1 count of wire fraud.

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Goldberg ran his tax preparation business out of a storefront in the Bronx. There were always long lines of clients at his door waiting for his assistance in filing their taxes. The Government alleges that part of the reason Goldberg's business was so busy was due to the fraudulent deductions he filed for his clients which totaled more than $7,000,000 over a span of five years. These fraudulent reductions resulted in thousands of dollars in tax refunds to individuals who were not otherwise entitled to this money.

Goldberg pled guilty to one count of subscribing to a false tax return for himself, one count of aiding and assisting in the preparation of a false tax return, and one count of wire fraud. At his upcoming sentencing hearing, Goldberg will face a maximum possible sentence of 26 years in prison. As a condition of his plea deal, he cannot contest a forfeiture to the IRS of a business bank account that had a balance of $500,000. Goldberg is set to be sentenced December 17, 2013.

Sources
Dept. of Justice Press Release

New York Daily News' article


Nashville Tax Return Preparers Face Mo' Problems

December 7, 2012, by The McKellar Law Firm, PLLC

As I have written about previously, tax return preparers can face both civil and criminal penalties for preparing false or fraudulent tax returns. One such tax return preparer company, Mo' Money Taxes, is now dealing with a civil injunction lawsuit, which was filed earlier this week against them in Nashville by the U.S. Attorney's Office in Middle Tennessee, according to published reports.

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The Justice Department's lawsuit claims that defendants Toney Fields and Trumekia Shaw did "intentionally prepare and file fraudulent federal income tax returns to obtain improper tax refunds for customers." Claimed tax losses by the Government could exceed $5 million in tax year 2011. Some of the alleged errors committed by employees of Mo' Money Taxes include: using taxpayers' end-of-the-year pay stubs (instead of W-2 forms) to assist in preparing tax returns; manufacturing fake W-2 forms; and claiming false tax credits for child tax credits, incorrect number of dependents, and false charitable donations.

This civil injunction in Nashville is the latest legal battle against Mo' Money Taxes, and follows the arrest of franchise owner Jimi Clark and four Mo' Money employees in October, 2012, for conspiracy to commit tax fraud by falsely claiming educational tax credits on 47 returns filed in 2009. Additionally, the Memphis-based company has hundreds of people claiming that they never received their tax refund checks.

IRS Considers Sharing Private Information With Law Enforcement in Effort to Thwart Tax Fraud

March 26, 2012, by The McKellar Law Firm, PLLC

As we approach the dreaded tax return filing season, the IRS is contemplating ways to crack down on those who would like to steal tax refunds. Reuters reports that in response to $130 million in stolen tax funds since last year, Florida Senator Bill Nelson has proposed new legislation that will allow the IRS to share tax return information with police. A pilot program in Tampa, Florida is being considered by the IRS due to the area being rampant with identity theft and tax refund fraud. The program would allow the IRS to share bogus tax return information with local law enforcement where fraud is suspected. Currently laws only allow the sharing of such information if the victim gives his or her permission.

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The law that currently prevents the IRS from sharing taxpayer information has been on the books since 1976 when Congress made it a crime to disclose this confidential information. Nina Olson, national taxpayer advocate for the IRS, cautions that while some sharing may be necessary in some cases, there is a possibility that unauthorized parties could gain access to it. She proposes a modification of the 1976 law to allow access to the information but only for law enforcement purposes.

Privacy concerns are the main antagonist of the proposed law and program. As of yet, no date has been set for the Tampa pilot program to begin. However, if the program is successful, one should expect an increase in the number of criminal prosecutions for tax fraud.

Georgia Man Sentenced to 20 Months for Filing False Tax Returns

September 6, 2011, by The McKellar Law Firm, PLLC

Georgia native Michael Thornton was sentenced to 20 months in prison and ordered to pay $319,242 in restitution after pleading guilty to tax fraud. Filing a false tax return violates the provisions of 26 U.S.C. ยง 7207.

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According to United States Attorney Sally Yates, the charges and other information presented in court: the Defendant worked for a collection agency from 2005 through 2007. While in that position, he prepared and filed fraudulent tax returns for numerous co-workers and associates. Disregarding the information given to him by the taxpayers, the Defendant inflated their incomes and fabricated deductions on the returns to obtain tax refunds that were not truly owed. Further, he did not list himself as the tax return preparer, review the returns with the taxpayers, or give the taxpayers a copy of the returns, which the Government claims was purposefully to impede the detection of his fraud. To make matters worse, when the IRS requested verification from the Defendant's company for the wages claimed on the fraudulent returns, the Defendant attempted to submit a fraudulent verification consistent with the bogus wages, but was caught by the company's owner and fired before he could do so.

In total, the Thornton filed over 340 returns for the 2005 and 2006 tax years. IRS agents examined a number of those returns and identified over $1.8 million in false items claimed by by the Defendant, resulting in an alleged tax loss to the government of nearly $320,000. Not surprisingly, Thornton also filed a fraudulent personal return for himself in the 2005 tax year.

Tax Return Preparer Fraud Can Carry Both Civil and Criminal Penalties

April 27, 2011, by The McKellar Law Firm, PLLC

The Internal Revenue Service and the Department of Justice have made it clear that they are turning up the heat on tax return preparers who submit fraudulent or false tax returns. Tax return preparer fraud has consistently been listed on the IRS' list of "Dirty Dozen Tax Scams." The IRS states that "tax return preparer fraud generally involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. This includes inflated requests for the special one-time refund of the long-distance telephone tax. Preparers may also manipulate income figures to obtain tax credits, such as the Earned Income Tax Credit, fraudulently."

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The Government can typically pursue civil penalties and injunctions against such tax preparers, such as the recent case of Chicago tax return preparer Rita Augustus, who was permanently banned yesterday from preparing tax returns for others. According to a Dept. of Justice press release, Augustus included fabricated charitable donations, employee business expenses and other deductions on tax returns that she prepared. The press release further claims that for tax years 2005 through 2009, Augustus prepared more than 4,000 federal income tax returns for customers with an unusually high refund rate. The Internal Revenue Service estimates that her return preparation for those years could have resulted in as much as $20 million or more in lost tax revenue.

The Government can also pursue criminal penalties, including incarceration and fines for those who prepare fraudulent tax returns, such as the case of Arkansas couple James Bruce Morris and Karen Sue Morris, were convicted yesterday of 44 counts related to tax evasion and theft of Social Security funds in U.S. District Court in Little Rock. After a two-week trial, the jury found the couple guilty on all counts. The couple were accused of defrauding the Social Security Administration out of disability benefits, underreporting their own taxable income and then using false documents to apply for Pell grants, and filing false tax returns to allow clients to claim the Earned Income Tax Credit.

If you are a tax return preparer and have concerns about returns that you have prepared, you should immediately contact an attorney who is capable of handling both the civil and criminal aspects of a tax return preparer fraud case.