Some of our favorite recent tax fraud cases.
Bolingbrook, Ill.: A federal court has permanently barred preparer Judy Brooks and Judy Brooks & Associates Financial Services Corp. (JBA) from acting as a preparer and from continuing to operate a tax prep business preparing federal tax returns.
According to the complaint, Brooks, who agreed to entry of the civil injunction order, inflated refunds for ineligible clients with returns containing false expenses from non-existent businesses and claiming head-of-household filing status for ineligible clients. The complaint also alleges that she fabricated tax credits, including education credits, child and dependent care credits, and residential energy credits.
The complaint alleges that all 59 returns that Brooks or JBA prepared for tax years 2010 through 2013 and that the IRS examined underreported clients’ due taxes. The IRS calculated a deficiency of approximately $6,729 per examined return, according to the suit.
The injunction order requires Brooks to provide the U.S. with a list of her clients since 2010 and to send a copy of the court’s injunction order to all clients for whom she prepared returns.
Hayward, Calif.: Preparer Runnveer Singh, 54, has been sentenced to two years in prison and ordered to pay $124,528 restitution for aiding and assisting in the preparation of false tax returns.
Singh operated his tax prep business from 2008 through 2013 and obtained clients from the local Fijian community. According to his plea agreement, Singh admitted that for the tax years 2009 through 2011 he prepared returns claiming both false and ineligible deductions and credits for clients, including unreimbursed employee expenses, charitable deductions, Schedule C expenses, education credits, personal property tax and other Schedule A expenses. His bogus returns caused the IRS to issue inflated tax refunds of at least $130,435.
In November 2012, during execution of a search warrant at his residence, Singh told IRS agents that he knowingly prepared false returns to obtain returning customers. Following the execution of the warrant, Singh also instructed one of his clients to submit both false and ineligible information to an IRS agent during the audit of his 2010 return; Singh did so to justify the false and ineligible business expenses he reported on the client’s 2010 tax return.
Singh, who pleaded guilty to one count of aiding and assisting in the preparation of false tax returns, also received a year of supervised release, with the condition that he not prepare state or federal returns. His sentence begins Sept. 30.
Sacramento, Calif.: Preparer William Glenn Green, 48, has pleaded guilty to assisting in the preparation of false tax returns.
According to court documents, while Green prepared returns at the tax prep business Will the Tax Man from 2007 to at least April 2011, he knowingly placed false information on his clients’ returns to inflate refunds or reduce taxes. The phony information included charitable contributions in large round numbers to charities like Amvets and United Cerebral Palsy and other deductions and credits related to education and business expenses.
The false information never came from Green’s clients and typically he did not inform his clients that he’d added these deductions and credits. Green, whose conduct resulted in a total tax loss of approximately $492,000, is scheduled to be sentenced on Oct. 14. He faces a maximum of three years in prison and a $100,000 fine, and can also be ordered to pay restitution to the IRS.
Cave Creek, Ariz.: Preparer Linda Mary Anderson of Coyote Accounting has agreed to a plea deal that could involve up to five years in prison and restitution, according to published reports.
Last year, Anderson was charged with 16 counts of false tax-related claims (Accounting Today). Authorities said that from about January 2009 through about November 2010, she prepared and filed federal returns for more than 100 taxpayers that collectively claimed more than $63 million in false income and withholdings.
Anderson prepared and e-filed more than 2,000 false tax documents with the IRS using 1099-As and 1099-0IDs to falsely report false income and withholdings. She also did not register for or use an e-file account under her own name or her business name, but instead used two accounts registered to others.
She reportedly pleaded guilty to making false claims to the IRS that cost the government $1.4 million in fraudulent refunds.
In addition to facing up to five years in prison at her sentencing scheduled for Nov. 16, Anderson, who is currently not in custody, could be required to make restitution for some of that money, reports added.
Shelton, Conn.: Preparer Bellarmin Namegabe, 47, has been sentenced to three years of imprisonment and a year of supervised release for preparing false returns.
According to case documents and statements in court, Namegabe falsely reported expenses, deductions and credits on numerous clients’ returns without his clients’ knowledge or consent. The false returns included fabricated Schedules A and C, numbers of dependents, fuel tax credits and other items.
IRS agents interviewed 11 of Namegabe’s clients who stated that he falsified their returns. In addition, as part of an undercover operation an agent dropped off his W-2 at Namegabe’s business, provided his name and some identifying information, such as his Social Security number, and left. With the information provided, the agent was only entitled to a refund of $632.
Approximately two weeks later, the agent’s return was posted to the IRS database; the return was prepared falsely and generated a refund of $3,235.
On Dec. 4, Namegabe pleaded guilty to one count of aiding and assisting the filing of a false tax return.
As part of his sentence, he must pay back taxes, penalties and interest related to the false returns he prepared during the 2007 through 2011 tax years for the 11 taxpayers interviewed. Tax loss attributed to those false returns is some $240,196.
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