Some of our favorite recent tax fraud cases.
Worcester, Mass.: Preparer Nydia Elicier, 56, owner of Cox Elicier Tax, has been found guilty on four counts of aiding or assisting in the preparation of false tax returns.
In 2008, Elicier, who also served as a pastor in a Worcester congregation, inflated client refunds by falsifying deductions such as those typically reserved for educators, false gifts to charity, overinflated medical expenses and fraudulent unreimbursed employee expenses. Elicier faces three years in prison, one year of supervised release and a $100,000 fine.
Birmingham, Ala.: Preparer Kristie E. Sykes, 44, has received a year in prison and a year of supervised release and been ordered to repay $44,080 to the IRS for filing false returns.
According to court records, Sykes, who pleaded guilty in September, worked at the now-defunct tax prep business VIP Tax Services, where from 2008 to 2010 she filed false returns for clients to inflate refunds. Authorities said she used a false First-time Homebuyer Credit, a false dependent, false net losses and false deductions, including for tuition and fees, medical and dental expenses, gifts to charity, and job expenses. Some of the false deductions and credits also enabled the defendant’s clients to falsely claim the EITC, the Additional Child Tax Credit and the Making Work Pay Credit.
Sykes admitted to 11 false U.S. returns for 10 of her clients for tax years 2007 to 2009. The total loss to the government was $49,411.
Janice Foy, 52, of Snellville, Ga., who owned and operated VIP, was sentenced in September to seven months in prison after pleading guilty to a two-count indictment charging her with one count of subscribing to a false federal return and one count of aiding in the preparation of a false return.
As part of their plea agreements, both women agreed to be permanently enjoined from aiding or assisting others in the preparation of taxes.
West Palm Beach, Fla.: The federal government has filed to permanently bar preparer Paul Jean from preparing federal returns for others.
The civil injunction complaint alleges that Jean, operating as Whiz Tax and Rejoice Tax Services, prepares federal returns for clients that understate tax liabilities by fabricating or inflating tax credits, including improper EITCs, education credits or fuel credits.
The complaint alleges that Jean also prepares returns that report false or inflated deductions, such as mortgage interest deductions or contributions to charity or such business expense deductions as supplies or office expenses.
According to the suit, the IRS interviewed several of Jean’s clients who stated that they had not provided Jean with information to support a claim for a credit and that they were unaware that the improper credit was claimed on their return.
The suit also alleges that in some instances Jean has prepared two returns for one client, one shown to the client but not filed with the IRS and the other return filed but not shown to the client. The filed return claims a larger refund than the return shown to the customer by using at least one of the schemes described; Jean then allegedly would keep the fraudulent excess refund.
Memphis, Tenn.: A federal court has enjoined preparer Stephanie Edmond and her business, the Tax Factory and the Tax Factory Enterprise Inc., from preparing federal returns. The order prohibits Edmond and her businesses from preparing returns that include such schemes as reporting non-existent businesses or claiming false education credits. The court also ordered that Edmond and her companies must hire a CPA to monitor the company’s books and records.
Lexington, S.C.: The U.S. has asked a federal court to permanently bar two local men from preparing federal income tax returns for others.
According to authorities, in 1997 Clinton A. Broomfield, Tony McGill and Stacy Middleton formed MBM Tax and Accounting Services LLC to prepare returns and provide financial services. In 2007, Broomfield, McGill and Middleton ended their formal partnership and opened separate tax prep businesses: Broomfield now manages Summerville MBM Tax Service, while McGill manages MBM Accounting and Tax Services LLC in North Charleston, S.C. The three continue to share advertising expenses.
In July 2013, a federal district court permanently barred Middleton from preparing federal returns for others; Middleton is not a defendant in the current lawsuit.
The complaints allege that, through Summerville MBM Tax Service and MBM Accounting and Tax Services, Broomfield and McGill prepare returns for clients that understate income tax liabilities and overstate refunds. According to the suit, the defendants fabricate bogus deductions on Schedules A and C that report non-existent business expenses and deductions that offset clients’ wages and falsely reduce their income taxes.
The complaints further allege that an IRS audit of returns prepared by McGill revealed tax understatements on 58 of the 61 returns, an average tax deficiency of $5,709 per return. Of the 147 IRS-examined returns that Broomfield prepared, 123 resulted in an increase of a client’s tax liability, an average tax deficiency of $2,817 per return, according to the suit.
The complaints allege that the U.S. Treasury may have lost millions of dollars in tax revenue as a result of the defendants’ conduct.
Shakopee, Minn.: Tax preparer Bruce Michael Boyd, 53, has reportedly been charged in local district court with theft by swindle, a felony that carries a maximum of 10 years in prison and a $20,000 fine.
According to police cited in news reports, Boyd, who prepared returns out of his home, diverted more than $21,000 in refunds that were owed to several clients into his own bank accounts.
Police reportedly said a complaint was first lodged by a couple who approached Boyd in January 2013 to have federal and state taxes prepared for a $200 fee. The man involved reportedly told police that he made arrangements with Boyd to have the $7,293 federal refund deposited into the man’s bank account. After not receiving the refund for a few months he contacted Boyd, who told him there was a mix-up with his Social Security number and that Boyd had a friend at the IRS who could fix the problem and would give the man interest for the refund owed him, said reports, adding that the man said Boyd never provided signed copies of the returns involved.
The couple then reportedly contacted the IRS, who told them that the $7,293 refund had already been deposited into a bank account in Milwaukee and that the money had been subsequently withdrawn and the account closed.
According to reports, Treasury and IRS records documented where his refund had been deposited. The form included a bank routing number and account number to the man’s Wells Fargo account, police told news outlets, but at the bottom of the form the account holder’s name was crossed out and the name “Boyd” was visible underneath. The return was neither dated nor signed, according to reports.
Authorities also reportedly found that during a four-month span, Boyd received six deposits from the U.S. Treasury and “multiple” deposits from the Minnesota Department of Revenue. Boyd was also hard to contact through last January, police told news outlets, often claiming to be “on a mission trip.”
Boyd’s bank reportedly told police 11 deposits were made in 2013 to Boyd’s account, totaling more than $13,000. Boyd also reportedly had an account through a pre-paid card that contained two deposits totaling $1,484. All told, according to police cited, the redirected refunds totaled at least $21,751.
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