A Southern California tax preparer has pleaded guilty to tax charges, admitting that he caused a tax loss to the government of $7,982,043 for tax years 2003 to 2009 by inflating the amount of mortgage interest on his clients’ tax returns.

Mario Placencia, 70, who worked in Montebello, Calif., admitted in his plea agreement that he intentionally falsified the federal tax returns of numerous clients by using numbers that he made up for the home mortgage interest they claimed so he could obtain refunds for the clients that he knew they were not entitled to receive.

Some of Placencia’s clients received notices of audits for tax years 2004, 2005 and 2006.  During those audits, Placencia provided the IRS with false documents so he could convince auditors that his clients had incurred expenses that he knew they had not incurred and were entitled to deductions that Placencia knew had been fabricated.

Placencia admitted that for two of his audited clients, he sent a letter on their behalf to an IRS office, enclosing a Form 1098 in the name of L.A. Great American Mortgage falsely stating that the clients had paid $19,876.23 in home mortgage interest and $5,182.17 in real estate taxes. According to prosecutors, Placencia knew that the L.A. Great American Mortgage Form 1098 was false. He admitted in the plea agreement that he had typed the Form 1098 using a blank form and numbers which he had made up.

Placencia faces up to nine years in federal prison and fines of $750,000 or more.  In his guilty plea, he agreed that if ordered by the court, he would make restitution to the U.S. government for up to $5 million in partial compensation for the losses. Placencia also agreed to file amended personal tax returns for himself for tax years 2005-2009, correctly reporting all of the unreported income he had received and correcting any of the improper deductions or expenses he had taken.

He also agreed to the entry of a binding civil injunction that would bar him for life from aiding in the preparation of tax returns for anyone other than himself and his wife, and barring him from representing other individuals before the IRS.

U.S. District Judge S. James Otero ordered Placencia to appear for sentencing on Nov. 14.

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