Tax attorneys who didn’t file, 19 suspended preparers in Maryland, and other highlights of recent tax fraud cases.
Longwood, Fla.: A federal court has permanently barred preparer Jason Stinson from preparing federal returns for others, and from owning or operating a prep business.
Stinson must also repay $949,952.47 that he received from “improper and fraudulent tax return preparation,” authorities said.
The court said that Stinson owns Nation Tax Services with stores in four states: Birmingham and Fairfield, Ala.; St. Petersburg and Tampa, Fla,; Albany and Augusta, Ga.; and Greenville and Raleigh, N.C. Stinson’s stores, the court found, targeted “underprivileged, undereducated poor people and Earned Income Credit claims.”
The court found that Stinson falsified information on clients’ returns to claim the maximum EITC amount by “claiming bogus dependents, fabricating unreimbursed employee expenses and charitable contributions, and fabricating business income and expenses.”
The court also found that in many instances Stinson and his preparers fraudulently lowered a customer’s taxable income by claiming false unreimbursed business expenses in large amounts — at times more than half of what the customer earned in a given year.
Stinson’s stores charged more than $600 to prepare a single return, even as much as $999, sometimes without telling the client, the court determined, further finding that Stinson’s practice was to take his fees out of his customer’s refund, rather than charge fees upfront, meaning that “a larger refund was better for the client and better for Stinson.”
Allentown, Pa.: Preparer Jessenia Cordero, 37, has pleaded guilty to conspiring to file federal tax returns using stolen IDs.
According to the indictment and court information, Cordero operated MJ & Associates and Express Tax Services, providing tax prep, check cashing and other services. Cordero and her co-conspirators obtained lists of Puerto Rico residents’ names and Social Security numbers and used these IDs to file fraudulent returns with the IRS.
The conspirators directed the IRS to mail the refund checks to addresses they controlled and to deposit the refunds onto pre-paid debit cards. Cordero used her businesses to cash fraudulently obtained refund checks totaling approximately $4,316,103.
Sentencing is June 12, when she faces a maximum of 10 years in prison, a period of supervised release, restitution and monetary penalties.
Rosenhayn, N.J.: Preparer Noemi Pender, 58, has been sentenced to one year in prison for her role in a conspiracy to boost business at a tax prep company she operated by preparing bogus income tax returns for clients.
Pender previously pleaded guilty to the first count of an indictment charging her with conspiring to aid and assist others in the preparation of false and fraudulent returns.
According to documents filed in the case and statements made in court, Pender operated Pender Tax Services, and for the tax years 2007 through 2011 she and Grace Garrett, 64, of Pittsgrove, N.J., prepared and filed returns based on false information. They used a number of fraudulent practices, including falsely claiming that a filer was head of household, inventing and inflating deductions, creating fictitious dependents and creating false credits for education and childcare. The bogus returns cost the government more than $340,000.
Pender was also ordered to serve three years of supervised release and to pay $341,439 restitution.
New Iberia, La.: Attorneys James Lynden Burton, 48, and his ex-wife, Lucretia Pecantte-Burton, 50, have pleaded guilty to willfully failing to file federal tax returns.
According to court documents, the two were partners of the law firm of Pecantte-Burton & Burton, which offered general legal services and representation. They also had a partnership interest in a tax prep business.
For tax years 2007, 2008 and 2009, Burton and Pecantte-Burton did not file individual income tax returns despite earning income from their law practice and the prep business. They filed delinquent returns after learning that they were under criminal investigation by the IRS.
They each face a maximum sentence of 12 months in prison, as well as a term of supervised release, restitution and monetary penalties.
Cleveland: Preparer Leona Moore, 38, has pleaded guilty to 34 counts of aiding and assisting in preparation of false income tax returns that led the IRS to issue $814,000 in fraudulent refunds, according to published reports.
Prosecutors told news outlets that Moore, a.k.a. Leona McDonald, operated a tax prep business that she alternately called Leona Moore Tax Services or Moore’s Tax Service. She found clients on Facebook and through word of mouth.
Between 2012 and 2015, she reportedly prepared and filed returns for clients that had false statements about employment, the amount of income and the number of dependents to generate inflated and false refunds. News reports added that she split the refunds with her clients.
Sentencing is June 19, reports added.
Annapolis, Md.: State Comptroller Peter Franchot has suspended processing electronic and paper returns from 19 preparers throughout the region, due to a high volume of questionable returns received.
The Maryland preparers are: First Rate Tax Service, Samuel Tax Services, A&E Tax Services, A Year Round Tax Service Inc. and Precise Financial, all in Baltimore; Integrated Multi Services, Money Back Tax and Max Tax Service, all of Silver Spring; MD Tax Solution and Multi Services, in Salisbury; Tax4All and Japrhispanic, in Takoma Park; Rightway Financial Services in Laurel; Robinson Tax and Bookkeeping SRV in Gwynn Oak; and Marylis in Gaithersburg.
The comptroller also suspended processing firms from the Virginia firms United Tax Pro in Alexandria and Sky Tax Service in Falls Church, as well as from MSM DBA PTS Tax Service in Douglasville, Ga., Trinity Supermarket Inc. in Mount Olive, N.C., and BKPR Management in Washington, D.C.
Suspicious characteristics detected on the returns included business income reported when taxpayers did not own a business; refund amounts requested much higher than previous-year returns; inflated or undocumented business expenses; dependents claimed when taxpayer did not provide required 50 percent support or care; and inflated wages and withholding information.
Jeff Stimpson is a veteran freelance journalist who previously served as editor of The Practical Accountant.