Some of our favorite recent tax fraud cases.
Trotwood, Ohio: Former preparer Zakia Moore, 33, has pleaded guilty to one count of making false claims for federal income tax refunds with the IRS.
According to court documents, between January 2009 and April 2010 Moore filed false claims for refunds while employed at H&R Block in Dayton. She filed false returns on behalf of Block customers or individuals referred to her. The approximately 89 fraudulent returns contained false W-2s or false income amounts on Schedule Cs. Loss to the United States totaled some $212,195. Moore had the individuals pay her a portion of the fraudulent refunds as a “fee” for her services.
She was released on bond and will be sentenced May 23, when she faces a maximum five years in prison and a fine of up to $250,000.
Houston: Preparer Diane Caldwell Larry has been charged in an indictment alleging 19 counts of preparing false returns and two counts of interfering with the enforcement of tax laws.
According to the indictment, Larry operated Paradise South Tax Services, where she allegedly prepared dozens of materially false returns for clients from 2008 through 2011. The indictment also alleges that she included in these returns bogus business losses and false and excessive itemized deductions and credits to generate excessive refunds totaling approximately $200,000. The indictment further alleges that when some of these returns were audited, Larry made up false documents to substantiate some of the deductions.
If convicted, she faces up to three years in prison and a possible $250,000 fine on each count.
Shelby, N.C.: Preparer Louis D. Banner, 41, has been arrested on three felony tax charges and one misdemeanor tax charge filed by the North Carolina Department of Revenue. He is charged with three counts of aiding or assisting in the preparation and filing of fraudulent North Carolina individual income tax returns and one count of willful failure to file a state income tax return. The arrest warrants allege that Banner helped prepare and file three North Carolina returns for tax years 2006, 2007 and 2010. An additional warrant alleges that he failed to file his 2011 state return.
Cincinnati: Preparer Mark Dicks, 48, has pleaded guilty to one count of filing false claims for federal income tax refunds.
According to court documents, between January 2009 and January 2010 Dicks operated Brown and Garcia Tax Service and EZ Tax Service, where for the 2008 and 2009 tax years he filed false claims for federal refunds. Most of the returns prepared and e-filed by Dicks for his clients contained false Schedule Cs claiming self-employment income from such occupations as child care, hair care, cleaning and janitorial, and clerical work. Most of Dicks’ clients in fact had little or no legitimate income. The false Schedule Cs qualified the clients for the EITC and inflated the refunds. Dicks prepared the returns with the intention of receiving part of the false refunds, most of which were deposited onto prepaid debit cards. Dicks retrieved part of the refunds and withdrew his cut before giving clients the remaining balance, authorities said.
Dicks caused at least 92 false claims refunds, resulting in a tax loss of $350,478. He was released on bond with sentencing set for June 10, when he faces a maximum of five years in prison and a fine of up to $250,000.
Nashville, Tenn.: The Department of Justice has filed to stop preparer Gilberto Cortes and his business, Mundo Hispano Services, from preparing federal returns. According to the complaint, Cortes and his business have prepared more than 7,000 tax returns since 2010, and he allegedly understates clients’ federal tax liabilities or generates inflated refunds by improperly claiming the additional child tax credit.
According to the complaint, thousands of his clients improperly claimed the credit and received, on average, more than $2,300 in improper benefits per return. In total, Cortes’ activities over the last three years have allegedly cost the U.S. Treasury as much as $12.8 million or more in lost revenue.
Detroit: The federal government has filed to bar preparer Margaret Brown from preparing federal returns for others. According to the complaint, Brown prepared returns that falsely claimed business income, business expenses and education credits. For example, the complaint states, she prepared a return in 2011 that reported that the client ran a barber business with income of $9,673 and expenses of $124; in fact the client did not have a barber business in 2011 and had no idea where Brown obtained such information. In another example in the complaint, Brown allegedly reported $4,000 in qualified education expenses on a client’s 2011 return when neither the customer nor her dependents attended college that year. The complaint also alleges that for tax years 2010 and 2011 she failed to comply with due-diligence requirements for preparers who claim the EITC on clients’ returns.
McAllen, Texas: The United States has asked a federal court to bar Melissa Alvarez and her companies, Best & Unique Income Services, Best & Unique Income Tax Melissa and Best & Unique Income Tax Services LLC, from preparing federal tax returns for others.
According to the complaint, Alvarez prepared returns for clients that contained false, improper or inflated deductions or tax credits, such as the EITC. In one example in the complaint, Alvarez allegedly claimed business-expense deductions on returns for a client who did not operate a business and without that client’s knowledge. The complaint further alleges that the IRS examined returns that Alvarez prepared from the 2004 through 2012 tax-filing seasons and 97 percent understated tax liabilities of Alvarez’s clients. The IRS estimates that the total tax harm from Alvarez’s activities during that period could exceed $10 million.