Some of our favorite recent tax fraud cases, including the scammers who targeted the head of a state tax agency.
West Hartford, Conn. Tax phone scammers would do well to find a phone book: One of their latest intended victims was the commissioner of Connecticut’s Department of Revenue Services, according to published reports.
Commissioner Kevin Sullivan recently told The Hartford Courant that he returned home one night earlier this month to find a blinking message light on his landline answering machine. “The message was a stern woman’s voice saying, We've been trying to reach you for some time [and] this is to give you official notice from the IRS, the Internal Revenue Services that we are going to be commencing a lawsuit unless you call this number and resolve your liability.’ Mind it, plural Services,’” Sullivan reportedly told the Courant. “The first tip right there.”
Threatening phone rip-offs top the IRS Dirty Dozen list of tax scams (Accounting Today): In the past 17 months the IRS received reports of more than 290,000 bogus phone contacts, adding that at least 3,000 victims lost a combined $14 million.
The paper added that if Sullivan had returned the call, “he probably would have been told he could resolve his liability by paying either in cash or an untraceable prepaid card.”
The IRS does not call taxpayers; its first contact is always via U.S. mail, the article added.
“If you don't call back from that landline,” Sullivan pointed out in the article, “you can’t get them. The system is programmed to recognize only people they have called.”
Bellflower, Calif.: Preparer Susan E. Amezcua has pleaded guilty to filing false federal income tax returns on behalf of clients that understated tax liabilities by several thousand dollars.
Amezcua, former operator of Four Seasons Income Tax Services with offices in Bellflower and Long Beach, Calif., pleaded guilty to two counts charging her with aiding and assisting in the preparation of false returns. According to the plea agreement filed in the case, in the calendar years 2009 and 2010, she prepared or supervised the preparation of thousands of federal returns for clients, which were usually e-filed and resulted in an attempted loss to the government of more than $1 million.
Amezcua claimed fraudulent itemized deductions and credits, including false employee, hobby and cellphone expenses, substantially understating the defendants’ taxes. The total amount of tax loss to the government as a result of the fraudulent returns was $523,538.
The two counts to which Amezcua pleaded guilty relate to the 2008 and 2009 federal returns filed on behalf of clients that included false deductions and credits, reducing the taxpayers’ liability by $8,757 and $5,340, respectively.
Amezcua faces a maximum of six years in federal prison and a fine of $500,000 and be ordered to pay restitution of some $523,000. Sentencing is July 20.
Jacksonville, Fla.: Preparer Fuada Delic, 32, has pleaded guilty to aiding and assisting in the filing of a false return.
According to the plea agreement, sole preparer Delic owned and operated Delica’s Tax Service and, on Feb. 6, 2009, prepared a 1040 on which she represented that the taxpayer had made charitable contributions of $14,220. She also represented that the taxpayer had incurred $1,820 in education expenses, resulting in an education credit of $1,510, in both cases knowing that her client had not made the claimed contributions or incurred the claimed education expenses. Delic filed the return with the IRS, which issued a refund of $3,323. Without the false statements, the taxpayer would have been entitled to a refund of $808.
Delic faces a maximum of three years in federal prison. As part of the plea, Delic agreed to make full restitution to the IRS for the tax loss arising from the 43 counts charged against her in the original indictment.
Kahului, Hawaii: Preparer James A. Ericson has been permanently barred from preparing federal returns for others. Authorities said he knowingly and repeatedly prepared returns that understated clients’ tax liabilities and took unreasonable positions when filing returns.
The complaint alleged that Ericson prepared roughly more than 1,000 returns per year and improperly understated clients’ federal tax liabilities by fabricating business schedules, expenses and business income for non-existent businesses; claiming false or inflated credits; and deducting personal expenses that were not legally deductible. The suit also alleged that Ericson falsely claimed to some clients that he was a former IRS employee.
The alleged loss to the U.S. Treasury may exceed $31 million for tax years 2007 through 2012.
The court’s order requires Ericson to produce a list of all persons for whom he prepared federal returns or claims for a refund since Jan. 1, 2008, and to notify all such persons of the injunction.
Auburn, N.Y.: Preparer William L. Congdon II has been arrested after a complaint that he opened a fake line of credit using a client’s name.
Police said Congdon allegedly used the victim’s personal information to obtain a line of credit against a future tax return and then withdrew money from that line of credit.
Bail was set at $10,000 cash, $20,000 bond.
Raytown, Mo.: Preparer Dinette Kay Cadenhead, a.k.a. Kay Taylor, 47, of Kansas City, Mo., has received 18 months in federal prison and been ordered to pay $14,082 in restitution in connection with a tax fraud.
On July 16, Cadenhead pleaded guilty to the theft of public money, admitting that she prepared federal income tax returns for clients containing material false and fraudulent claims. Cadenhead helped at least 12 individuals file at least 29 fraudulent returns for the tax years 2008 through 2010. The aggregate tax loss is $134,237.
She admitted that she used false deductions to increase clients’ refunds, including fraudulent charitable deductions, medical expenses, accounting expenses, attorney expenses, unreimbursed employee expenses and other expenses. She also included false IRA deductions on 18 of the returns and reported net business losses, false energy credits and fraudulent dependents for some clients.
Cadenhead e-filed many of the returns from her home computer but indicated that the returns were self-prepared.
She charged a prep fee of $65 to $600 per return, but without the knowledge of nine of her clients diverted a portion of the fraudulent refund into her own bank account. In total, she steered $14,082 into her accounts by splitting her unknowing clients’ refunds between February 2010 and March 2012.
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