A Florida CPA has been arrested and charged with using her tax preparation business to facilitate an income tax refund fraud scheme.
Pamella B. Watson, 60, operated Watson & Associates Business Services, Inc., a tax prep business in Miami. She allegedly used various methods to fraudulently file tax returns and receive unauthorized tax refunds on behalf of clients. Watson would prepare the returns and provide clients with a copy of the filing showing a refund amount or an amount payable to the IRS. But without the client’s knowledge or authorization, the figures on the prepared return would be changed and a tax return showing a higher refund amount would allegedly be filed with the IRS. A client’s bank account would receive the refund amount reflected on the copy of the filing shown by Watson to her client, while the remainder of the inflated tax refund would allegedly be deposited into an account controlled by the defendant.
Watson prepared approximately 557 federal income tax returns for her clients from tax years 2010 through 2013. According to prosecutors, 395 (or about 71 percent) of the filings received refunds that were split into an account controlled by Watson, or the entirety of the refund was diverted into her bank account. Five of the 557 tax return filings allegedly showed an amount due to the IRS and 11 of the filings did not claim a refund. In addition, the remaining 541 (or 97 percent) tax returns claimed a refund.
The complaint further alleges that an IRS analysis of Watson’s bank accounts, for the period from approximately January 2011 through September 2014, showed more than $3,405,479.20 in tax refund deposits related to 183 client taxpayers. The analysis further showed that 10 checks (totaling $222,676) that had been written by the defendant’s clients to the IRS were allegedly posted as credits to Watson’s personal tax account history.
Watson was ordered held in custody following her initial appearance on the complaint. A pre-trial detention hearing before U.S. Magistrate Judge Lurana S. Snow is scheduled for May 22, 2015 in Fort Lauderdale.
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