A roundup of some our favorite recent cases of tax fraud.
Birmingham, Ala.: A federal court has permanently barred preparer Jessica Leverett, a.k.a. Jessica Harris, from preparing returns for others after a U.S. complaint alleged that she repeatedly prepared federal income tax returns that understated clients’ liabilities or overstated their refunds.
Leverett owns and operates a number of different prep businesses, including Tax Money Now, Dynamic Tax Services, Dynamic Tax Solutions and Express Money Tax, according to the complaint. Her businesses prepared returns that fabricate Schedule C losses to offset taxable income or to increase the EITC, according to the complaint. The complaint also alleged that her businesses prepare returns that claim undeserved education credits and that misreport self-employment income as household employee wages to avoid self-employment tax.
The IRS examined 264 returns prepared by Leverett’s businesses and found that 206 understated tax due, the complaint alleges. Altogether, Leverett’s activities may have cost the U.S. more than $2.5 million in understated taxes or fraudulent refunds, according to the complaint.
Leverett, who did not file a response challenging the allegations, was also ordered to give the federal government a list of her clients since 2014.
Roswell, N.M.: Preparer Sylvia Franco, 46, received a suspended 18-year prison sentence with the stipulation that she pay $38,513.40 restitution to her victims after fraudulently preparing returns for 28 individuals from 2011 to 2014.
She will serve 18 months in prison and must also serve five years of supervised probation; she was also ordered to no longer prepare income tax returns.
Franco owned and operated Sylvia Tax Service, where she prepared returns with fraudulent, inflated deductions and cheated the State of New Mexico out of $120,493 in taxes owed.
Jamaica, N.Y.: Nafeesah Hines, 46, has pleaded guilty to one count of conspiracy to defraud the U.S. in connection with a scheme to submit false federal returns seeking fraudulent refunds.
According to the indictment, Hines, who worked at the U.S. Food and Drug Administration, conspired with Rodney Chestnut, a retired New York City Department of Corrections officer, and Clive Henry, a former IRS employee in the business of preparing returns, to recruit clients for using fraudulent 1099-OIDs to falsely claim refunds of taxes that were never paid.
The indictment alleged that Hines, Chestnut, and Henry collected fees from clients based on a percentage of the refunds received, and supplied the clients with correspondence containing false and frivolous claims to send to the IRS in response to warning letters regarding the returns.
In 2013, a federal court permanently enjoined Hines from promoting a tax fraud scheme involving fraudulent Forms 1099-OID and from preparing returns for anyone other than herself.
Sentencing is October 11, when she faces a maximum of five years in prison, a term of supervised release and fines. Chestnut and Henry previously pleaded guilty to conspiracy to defraud the U.S.; their sentencing hearings are pending.
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