A roundup of our favorite recent tax fraud cases.
Greenbelt, Md.: A federal court has held preparer Barbara Lynn McCarthy in contempt for preparing federal income tax returns in violation of a prior order that prohibited her from acting as a preparer.
In 2014, the district court enjoined McCarthy, who formerly operated as Barbara’s Tax Service, from preparing returns. After entry of injunction, the IRS discovered that she continued preparing returns despite the court’s order.
At a hearing this month, the government established that McCarthy violated the court’s order; the court has ordered McCarthy to return to her customers the portions of their refunds that she diverted to herself. The court also ordered her to pay the federal government $2,500 for her actions after the injunction and provide the government with a list of all returns she prepared since the injunction was put in place.
Stuart, Fla.: Preparers Earl Moise and Shahab Shaukat have been indicted on one count of conspiring to defraud the U.S. and nine counts each of aiding and assisting in the preparation of false federal income tax returns.
According to allegations, Moise and Shaukat conspired to prepare false and fraudulent individual returns for others for the 2010 through 2012 tax years. Moise and Shaukat operated a branch of Tax R Us, preparing false returns in that office. Moise is also charged with one count of fraudulently filing his own federal income tax return for 2011.
These returns allegedly included false education credits and American Opportunity Credits, as well as false statements regarding business income or deductions.
If convicted, the pair each face a maximum of five years in prison for the conspiracy count and three years in prison for each count of aiding and assisting in the preparation of false returns. In addition, Moise faces a maximum of three years in prison for the one count of filing a false return. Both defendants also face terms of supervised release, monetary penalties and payment of restitution to the IRS.
Odessa, N.M.: Preparer Juan Alfonso Gonzalez-Camacho has been indicted on 14 counts of aiding and abetting the preparation of a false tax return on accusations that he filed fraudulent deductions from January 2011 to April 2013, according to published reports.
Gonzalez-Camacho, who owned Latinos Assistance Income Tax, was reportedly indicted in June but first arrested recently on the 14 federal charges, which authorities estimate resulted in $162,000 of fraudulent refunds.
A cited Department of Justice news release reported that Gonzalez-Camacho prepared and filed income tax returns that claimed deductions to which the defendant knew the taxpayers were not entitled.
News outlets added that Gonzalez-Camacho was indicted in 2013 on 23 counts of tax fraud and was sued by the U.S. government in 2015 because of reported improper deductions. Those charges against him were reportedly dropped in 2013. Reports said that the New Mexico Taxation and Revenue Department reported he was accused of filing false returns on behalf of local residents, costing the state more than $40,000.
That lawsuit reported that of the 276 returns examined by the IRS from 2007 through 2013, 275 showed understated tax liabilities and only one was free of problems, reports said.
The lawsuit reportedly claimed that Gonzalez-Camacho included deductions on many returns that were exaggerated or completely fabricated, including made-up business expenses and farms that did not exist.
One couple cited in the lawsuit that they were audited from 2010 to 2012, reports said, adding that at one point Gonzalez-Camacho filed a Schedule F based on the couple simply having a dog, a fish and a bird.
According to published reports, another couple reported that Gonzalez-Camacho allowed deductions for vacations and home expenses, and when he was done completing their 2012 tax return asked if the refund was enough or if they wanted more.
