An unprecedented number of tax preparers in Manhattan and the Bronx have been charged in a variety of tax fraud schemes a week before the end of tax season.
The charges against 26 preparers in the two New York City boroughs represented the largest coordinated takedown of tax preparers in history. They were charged as part of a joint investigation known as Operation Brass Tax by the U.S. Attorney's Office for the Southern District of New York and the IRSs Criminal Investigation Division.
U.S. Attorney Preet Bharara and IRS Special Agent-in-Charge Patricia Haynes unsealed charges Thursday against the tax preparers. Sixteen were in custody, four had been previously charged and face new charges, and six remain at large. "Professional tax preparers are supposed to be gatekeepers, not facilitators of fraud," said Bharara in a statement. "In a criminal twist on the old proverb about death and taxes, some of the defendants charged today allegedly even filed for tax refunds using the identities of dead people."
The preparers were charged with various schemes, including using the stolen identities of children to falsely claim them as dependents on clients returns; claiming business losses from fictitious businesses; using stolen identities, including Social Security numbers, of deceased individuals to list as the taxpayers on fraudulent returns, and taking the resulting refunds themselves; doing the same with stolen identities of residents of Puerto Rico, who are prime targets for identity theft because they are issued Social Security numbers but do not have to file federal income tax returns; and doing the same with stolen identities of individuals on public assistance.
The preparers also earned inflated commissions and fees related to the allegedly fraudulent refunds they generated.
In a number of cases, IRS undercover agents posed as clients or prospective clients and in some instances recorded the defendants as they agreed to manufacture fake business losses and falsely inflate other deductions.
Many of the defendants allegedly earned commissions on refund anticipation loans and received a commission for every RAL they extended to clients. In one case, they allegedly received a supplemental fee, taken from the RAL or in cash from the client, based on the amount of the refund the defendants fraudulently obtained. The defendants in that case also purportedly charged clients $400 to $500 per fake dependent they listed on their clients returns.
Some of the tax preparers also allegedly listed fraudulent deductions without their clients knowledge, or using stolen identities, and collected refunds for themselves.
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