Some of our favorite recent tax fraud cases.
New Orleans: Preparer Kenshika Sade Jiles has been arrested on charges of defrauding the State of Louisiana of more than $900,000 through the filing of false returns.
Investigators say Jiles, owner of S&A Tax Service and who now faces two felony counts of computer fraud and injuring public records, prepared and submitted returns containing false information including phony business expenses, unreimbursed employee expenses and improper child care tax credit claims. Her alleged actions resulted in $923,751 in unpaid taxes and fraudulent refunds.
Columbus, Ohio: Preparer Fatma Ali, 39, has been charged with two counts of conspiracy to defraud the IRS and 48 counts of willfully aiding and assisting in the preparation and filing of false federal income tax returns, and was among five individuals indicted in a conspiracy to defraud the IRS with false returns.
According to the indictment, Ali, a preparer for Speedia Tax Services, joined another of the indicted individuals in allegedly helping to prevent the IRS from computing and collecting income taxes from the local company Health Empowerment Partners LLC, between January 2011 and March 2012, and joined with two other indicted individuals in a similar scam involving taxes of the local company Better Home Care Services Inc., between January 2008 and October 2011.
Ali allegedly created false 1099s in the names of “other” taxpayers that claimed a portion of the income actually earned by the individuals from BHCS and HEP, helping under-report AGIs. Also, amounts claimed on the false 1099s were reported as deductible business expenses.
Although the “other” taxpayers did not actually receive the income shown on the false 1099s, Ali allegedly prepared returns for them that claimed this income as their own, enabling unwarranted tax credits.
Between April 2008 and April 2012, Ali allegedly prepared false 1099s reflecting income received and expenses claimed by employees of BHCS and HEP that were included with the returns for persons not employed by those companies.
Conspiracy to defraud the IRS carries a maximum of five years in prison and a fine of up to $250,000. Willfully aiding and assisting in the preparation and filing of false federal income tax returns with the IRS carries a maximum of three years in prison and a fine of up to $250,000.
Little Neck, N.Y.: CPA Ramesh Sarva has been barred by a federal court from promoting and selling an alleged nationwide tax scheme.
The complaint alleged that Sarva falsely informed clients that the welfare benefit plans he promoted were legal, when in fact he promoted plans that illegally permitted his clients to both claim substantial deductions for their plan contributions and later access the full cash value of their plan contributions by taking out loans against the life insurance policies purchased.
Welfare benefit plans permit companies to pool and make monetary contributions toward the purchase of life insurance for the benefit of each company’s employees or principals. Participants in legitimate welfare benefit plans may be able to deduct the full amount of their plan contributions as a business expense.
The complaint alleged that Sarva’s promotion of these plans deprived the U.S. Treasury of significant amounts of tax and subjected his customers to audits and IRS scrutiny. The injunction bars him from promoting and selling any purported welfare benefit plans. The court also ordered him to provide a list of his clients and to send copies of the injunction order to them.
Hayward, Calif.: Preparer Runnveer Singh has been charged with 24 counts of aiding and assisting in the filing false returns. According to the indictment, from about April 15, 2010, through April 17, 2012, Singh prepared and presented federal 1040s on behalf of numerous taxpayers, false items on the returns including Schedule A deductions, Schedule C expenses and education credits.
Singh was released on $100,000 bond with his next court appearance scheduled for May 9, when he faces a maximum for each count of three years in prison and a fine of $250,000.
Montgomery, Ala.: The United States has requested that the federal district court permanently bar Tonja Renee Toney and Jenika Williams from preparing federal income tax returns for others.
According to the complaint, Toney and Williams each prepared returns as employees of Premier Tax in 2007 and 2008 and both pleaded guilty to charges related to their work at Premier. The complaint further alleges that both prepared false and fraudulent returns after being interviewed by IRS agents. The complaint alleges that both knowingly prepared federal returns for clients that understated tax liability by reporting false income to inflate claims for the EITC.
Omaha, Neb.: Preparer Martin M. Mazarura, 33, has been sentenced to one year and one day in prison and a year of supervised release and ordered to pay $82,738 in restitution for preparing false individual income tax returns, according to published reports.
In 2006, Mazarura prepared returns containing inflated credits, the IRS told news outlets. The investigation reportedly found 18 returns where Mazarura claimed telephone excise tax credits, additional child care credits and Earned Income Tax Credits that were unapplicable or exceeded the entitled amount. He also provided clients with false dependents on their returns, according to reports.
Waterville, Ohio: Preparer Ronald D. Durbin, 72, principal officer and operator of Citizens Tax Service, has received a year in prison after failing to file returns on more than $1.3 million in personal income, published reports said. Durbin, who was also ordered to pay restitution, reportedly pleaded guilty last August to four counts of failing to file and pay returns on some $1.3 million of earned from 2006 through 2009.
Espanola, N.M.: Preparer John Alex Salazar, 62, has been sentenced to five years of supervised probation and been ordered to pay over $50,000 in back taxes, penalty and interest to the New Mexico taxation and revenue department, according to published reports.
Salazar reportedly entered a no-contest plea to two counts of tax fraud earlier this year. In March 2013, he was indicted on 16 counts of tax fraud after he allegedly claimed fraudulent deductions and farming losses on returns he prepared and filed for over 20 state residents in previous tax years, reports said.
Salazar was further ordered to terminate his business, services and assistance to taxpayers effective March 21, reported added.