Some of our favorite recent tax fraud cases.
Durham, N.C.: Preparer Tasha Renee Smith has been sentenced to 30 months in prison for conspiring to defraud the IRS. Smith was also ordered to serve three years of supervised release and to pay $375,578 restitution to the IRS. She pleaded guilty on April 8 to a conspiracy charge.
According to court documents, Smith was employed by the North Carolina tax-prep business Nothing But Taxes for parts of the filing seasons for tax years 2005, 2006 and 2007. While at NBT’s Durham location, Smith intentionally falsified returns for many clients though such methods as adding false dependents and inflating the EITC for low-income clients by adding fictitious income.
Authorities said that during her second and third seasons preparing returns at NBT, Smith made extensive efforts to solicit and purchase the names, dates of birth and Social Security numbers of local individuals. She used the identities as false dependents on returns she prepared at NBT later that tax year and also charged clients a side cash payment in exchange for a false dependent, in addition to the flat return preparation fee charged by NBT.
According to court documents, during the 2008 filing season Smith and two business partners opened their own tax prep business, Tax Wizards, with branches in Durham and Roxboro, N.C. Smith owned and operated the business and hired her own preparers. Tax Wizards also became a center of tax fraud: Smith encouraged preparers to keep falsifications on returns modest, about $1,200 to about $1,500, to avoid IRS scrutiny.
Authorities said Smith also knew her Tax Wizards preparers falsified returns for clients because she witnessed some falsifications. Smith intentionally tried to avoid being physically present at the business, in part because she did not want to be present while her sanctioned fraud occurred.
Court documents state that Smith and another person also opened a preparation business during the 2009 tax filing season: Keystone Tax Services, also in Durham, and which also became a hotbed of tax fraud. Again, said authorities, Smith intentionally tried to avoid being physically present at her business. Around April 2011, Smith closed Tax Wizards and Keystone out of fear of IRS detection of the rampant fraud.
According to court documents, from January to April 2012, Smith and other investors opened Tax Solutions with branches in the North Carolina municipalities of Roxboro, Durham, Burlington and Kinston. Smith was hired in exchange for a share of the business’ profits and charged with hiring managers for the various branches. She hired at least one manager she knew to be complicit in the fraud at Tax Wizards and Keystone. Preparers at Tax Solutions also falsified numerous returns for their clients.
Montebello, Calif.: Preparer Eduardo Ramos, 44, of Whittier, Calif., has pleaded guilty to preparing and submitting false federal returns on behalf of clients.
Ramos, former operator of E Tax Income Tax Services, pleaded guilty to one count of aiding and assisting in the preparation of a false income tax return. In his plea agreement, Ramos admitted that while operating E Tax during the 2010, 2011 and 2012 tax years, he prepared dozens of fraudulent returns on behalf of clients, causing a total tax loss to the government of at least $96,909.
The single count to which Ramos pleaded guilty relates to a 2010 federal return prepared on behalf of a client. Ramos prepared the return and reduced the tax liability by including false itemized deductions including gifts to charity and job expenses. The false deductions cost the government $4,175.
Nashville, Tenn. Preparer Charles Bright Sr., 55, has been charged with sales tax evasion and theft.
In late July, Bright was indicted on multiple felony counts of sales tax evasion and one felony count of theft of property over $60,000. The indictments charge that Bright took sales tax money from clients and intentionally withheld it from the state without clients’ knowledge.
Bright was also indicted in November 2012 for sales tax evasion, theft and impersonating a licensed professional. He awaits trial for those charges.
If convicted, Bright faces a maximum of two years in prison and a fine of up to $3,000 for each count of sales tax evasion. He could also receive a maximum of 12 years in prison and fine of up to $25,000 for theft of property.
Manteca, Calif.: Resident Esther Lynne Robertson, 57, has pleaded guilty to filing false claims for federal refunds, but claimed her preparer suggested a way to get money from the government by claiming large refunds based on fictitious 1099-OID withholdings.
According to the plea agreement, Robertson, because of that suggestion, filed two false returns in 2008: one for tax year 2005 claiming a $90,538 refund and one for 2007 claiming a $313,248 refund. The IRS sent her a check for $313,248.
In February 2009, the IRS issued a levy to Robertson’s bank for the balance in the account. In September 2011, Robertson filed a false lien against the property of the IRS commissioner.
Sentencing is Sept. 23, 2015.