A roundup of our favorite recent tax fraud cases.
Miami: A federal court has permanently enjoined preparer Rose M. Chazulle and her company, RMC Professional Services Corp., from preparing federal returns for others.
According to the complaint, the defendants prepared federal income tax returns for customers that falsely claimed refundable credits, including the American Opportunity Tax Credit and Lifetime Learning Credit for clients; fuel tax credits for clients who had no businesses of any kind; fabricated business losses even though the customers did not have a business; and described wages as household help income in order to falsely claim the EITC.
The court also ordered the defendants, who agreed to the civil injunction, to deliver a copy of the injunction to all of their customers since Jan. 1, 2010.
East St. Louis, Ill.: Preparers Edric A. Russell, 35, and Pierre J. Carter, 34, have both pleaded guilty to filing false returns.
Both worked at the East St. Louis location of a tax return preparation business known as Tax King, a chain owned and operated by co-defendant Eyob Tilahun. In addition to the East St. Louis location, Tilahun operated several Tax Kings in St. Louis.
On May 20, Tilahun pled guilty to conspiring to submit false claims for refunds, admitting that Tax King’s preparers were trained and instructed to increase clients’ refunds by falsifying information on returns. The false information included Schedules Cs false wages to cause the clients to qualify for larger EICs; false education expenses that enabled clients to qualify for American Opportunity Credits; and false information regarding fuel taxes that qualified clients for federal fuel tax credits.
Tilahun admitted that he profited from the scheme by charging Tax King’s clients fees of approximately $400 to $650. The indictment in the case alleges that the preparers also profited by requesting cash “tips” from the clients that ranged from approximately $100 to $1,000.
Preparing a false income tax return carries a maximum three years in prison, a $250,000 fine and restitution.
In addition to Russell, Carter and Tilahun, four other defendants in the case have previously pled guilty.
Russell and Carter will be sentenced on January 27.
Lawton, Okla.: A federal grand jury has issued an indictment charging preparer LaQuinta D. Fisher, 26, with 11 counts of filing fraudulent returns for more than $70,000 in false refunds, according to published reports.
Fisher, a.k.a. “Nooney,” electronically prepared returns between 2011 and 2014 for local individuals, reports said, adding that according to the indictment she told clients, recruited by word of mouth and flier distribution, “that all they needed was a dependent child in order to receive a refund from the government.” She is accused of adding fictitious income and false dependents to increase EICs, according to reports.
Fisher faces up to five years in prison or a $250,000 fine, or both, per count, reports added.
Nashville, Tenn.: Preparer Karen Liane Miller, 61, has been sentenced to 18 months in prison for filing false claims for refund.
Miller admitted that from about August 2008 until about July 2009, she prepared and submitted multiple false federal income tax returns to the IRS on behalf of her friends, family and herself. The returns reported false amounts on 1099-OIDs and 1099-As that Miller created and fraudulently represented to have been issued by financial institutions. The returns also reported identical or near-identical false amounts of federal income tax withheld from the fictitious income to inflate claims for refunds.
Miller filed 48 fraudulent returns that falsely claimed more than $19.8 million in refunds. The IRS issued $1,003,238 in refunds for eight of the 48 fraudulent returns.
In addition to the prison term, Miller was ordered to serve two years of supervised release and to pay $939,835.62 restitution to the IRS.
Arlington, Va.: Congressional staffer Isaac Lanier Avant has been charged with five counts of willfully failing to file a tax return.
According to the criminal information and affidavit, Avant is a staff member employed by the U.S. House of Representatives since approximately 2002 who for tax years 2009 through 2013 earned more than $170,000 annually but did not timely file a personal income tax return for any of those years.
In May 2005, Avant filed a form with his employer that falsely claimed he was exempt from federal income taxes. Avant did not have any federal tax withheld from his paycheck until the IRS mandated that his employer begin withholding in January 2013.
