The owner of a tax preparation business in Washington, D.C., and her son, a schoolteacher, have been convicted of preparing false tax returns for clients.
Sherri Davis, 42, was the owner and operator of 2FT Fast Facts Tax Service, a tax prep business that operated in Washington, D.C., from 2003 to 2012. In 2012, she changed the business’s name to Davis Financial Services. Her son, Andre Davis, 24, was listed as the owner and operator of that business.
Sherri and Andre Davis were each convicted on one count of conspiracy to defraud the United States. Sherri Davis was also convicted of 25 counts of aiding and assisting in the preparation and filing of false federal income tax returns and three counts of filing false personal income tax returns. Andre Davis was also convicted of one count of aiding and assisting in the preparation and filing of false tax returns.
“As we enter the 2015 filing season, tax return preparers should take note of today’s conviction,” said Principal Deputy Assistant Attorney General Caroline D. Ciraolo for the Department of Justice’s Tax Division, in a statement. “The Department of Justice’s Tax Division, working with IRS-Criminal Investigation, the Offices of the U.S. Attorneys and other local, state and federal law enforcement partners, will identify, investigate and prosecute to the fullest extent of the law those individuals who willfully participate in the preparation and filing of false returns. These individuals are a threat to the integrity of the tax system, and will face felony charges, incarceration and substantial economic sanctions.”
The Davises aren't the only parent and child tax preparers to run afoul of the law recently. In Louisiana, a pair of tax preparers were charged earlier this month with committing fraud (see Mother and Son Tax Preparers Charge with Filing False Tax Returns). Last month, a father and son in Los Angeles were convicted of helping clients set up undeclared offshore bank accounts to evade taxes (see Father-Son Tax Preparers Convicted in Israeli Bank Tax Case).
In some instances, Sherri and Andre Davis and those working for them allegedly attached fraudulent Schedules C to the tax returns they prepared for clients that reported false business losses and false Schedules A that reported fraudulent itemized deductions. On some returns, the Schedule C business claimed on the return was completely fabricated. On other returns, the Schedule A included false or grossly inflated gifts to charity, job expenses and other miscellaneous expenses.
For 2007 through 2009, according to prosecutors, Sherri Davis filed her own false tax returns in which she failed to report more than $300,000 in tax prep fees.
“Intentionally preparing false tax returns is a criminal offense that reflects badly on the entire industry,” said special agent in charge Thomas J. Kelly of IRS-Criminal Investigation’s Washington, D.C., Field Office. “As Sherri and Andre Davis found out today, it is not a good idea to file false tax returns and expect the IRS not to investigate and recommend prosecution. IRS-Criminal Investigation is committed to holding individuals accountable for their criminal actions.”
The Davises are scheduled to be sentenced on April 29. The conspiracy conviction carries a statutory maximum sentence of five years in prison and a $250,000 fine. Each of the other counts has a statutory maximum of three years in prison and a fine of $250,000.
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