The Internal Revenue Service’s Criminal Investigation division has cracked down on a pair of Southern California tax preparers accused of stealing their clients’ tax refunds.
In one case, the tax preparer has pleaded guilty and faces up to six years in prison. Ernesto Jesus Suarez, 61, admitted to preparing and filing hundreds of tax returns, including his own, claiming inaccurate and false items on his taxpayer-clients’ returns. Suarez filed the false tax returns to increase refunds, collecting over $1.4 million of stolen refunds from the IRS.
According to the plea agreement, Suarez would meet clients at their homes and prepare a largely accurate income tax return on his laptop. If the client was due a refund, Suarez would give the client a check from his personal checking account in the amount stated on the accurate return and misrepresent to the client that he would file the accurate return with the IRS.
Later, Suarez would prepare a false tax return, including fictitious items such as false spouses, dependents, child or dependent care, and education expenses, in order to increase the refund amount. Suarez would forge the signature of the taxpayer and then mail the false tax return to the IRS. Suarez would direct the inflated refunds to be deposited into 29 different bank accounts that he controlled.
Suarez also admitted, according to his plea agreement, that he employed a similar scheme on his own 2008 federal tax return, claiming a fictitious spouse and dependent. Suarez also admitted he failed to report his true income from his tax return business and the illegal refunds he received.
As part of his plea agreement, Suarez agreed to a permanent injunction, barring him for life from preparing federal income tax returns for anyone other than himself and his legal spouse and barring him from representing persons before the IRS. Suarez will publish the civil injunction to all of his current clients. He also agreed to make full restitution in the amount of $753,477 and agreed to enter into a closing agreement with the IRS for taxable years 2005 through 2009, correctly reporting his tax liability to the IRS.
Suarez faces a combined maximum sentence of six years in prison when he is sentenced in May, along with a one-year period of supervised release; a fine of $500,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $200.
In a similar case, Javier Francisco Vega, 52, was arrested and made his initial appearance in court. A federal grand jury returned a 39-count indictment Wednesday charging him with 35 counts of filing false income tax returns and four counts of theft of government property, namely tax refunds and economic stimulus checks.
According to the indictment, Vega filed 35 tax returns claiming false deductions, expenses or credits for which the taxpayer was either not entitled to claim or only entitled to claim substantially less than the reported amount. The false tax returns allegedly included information with respect to false dependents, unreimbursed employee business expenses, education credits, and business profit or loss. Vega allegedly also stole two refund checks and two stimulus checks issued from his clients.
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