Wednesday, June 25, 2025
Was This Convicted Tax Return Preparer Courageous or Foolish?
What got my attention this time wasn’t the fact that a tax return preparer filed fraudulent returns on behalf of clients, many of whom did not know he had claimed credits on their returns to which they were not entitled. It was the fact that after being convicted and while awaiting sentencing he continued to prepare fraudulent returns.
According to a Department of Justice press release issued yesterday, a Yeadon, Pa., tax preparer was sentenced to three years in prison, one year of supervised release, a $10,000 fine, and $12,717 in restitution, for “knowingly and willfully including false energy credits in tax forms that he prepared for paying customers.” He did this for tax years 2018 through 2020, preparing at least 146 returns “that falsely offset tax liabilities or claimed reimbursable credits for money allegedly spent on wind turbines, solar panels, or other energy improvements.” According to the Department of Justice, he did this “because he wanted to increase client refunds and client satisfaction.” These false returns “caused his clients to understate their tax liabilities by more than $700,000.” In September of 2024, the preparer “pleaded guilty to an information charging him with one count of aiding and assisting in the preparation of a false tax return, and admitted to filing the other 145 false returns, along with his own false returns for the same three tax years.” The restitution is for the taxes he evaded on his own return. His clients are responsible, unfortunately, for the understated taxes on their returns.
It wasn’t the press release that drew my attention to the case. It was this article in this morning’s Philadelphia Inquirer. It may be behind a paywall, but I’ve not been able to find any other online source for the additional information revealed in the article. According to the article, after pleading guilty, the preparer continued to prepare tax returns. Court officials and the Department of Justice were initially unaware of this development. When they discovered that the preparer continued to prepare tax returns, they figured out that he did so using his mother’s electronic filing identification number. By the time his continued tax return preparation activities were discovered he had filed more than another one thousand returns. During court proceedings, the preparer claimed he was no longer working as a preparer, and making money by doing Lyft and Uber driving and doing home health services. When the sentencing hearing was postponed because of the discovery, the preparer did not stop and filed another 70 returns using his mother’s identification number.
Though the prosecutors asked that the prepare be sentenced to 41 to 51 months in prison, the judge limited the sentence to three years. Three years is the statutory maximum for the offenses to which the preparer had pleased guilty. It is unclear whether additional chargers will be brought. I suppose it depends on whether there were fraudulent claims on the more than 1,000 additional returns he prepared and on whether prosecutors decide to pursue perjury charges for his false testimony that he had stopped preparing returns.
So is it foolishness or courage when a person continues to engage in behavior that causes the person to be indicted and convicted of – or to plead guilty to – criminal tax fraud charges? We often hear the question, “What were they thinking?” and often the answer is, “They weren’t.” But in this instance the use of the mother’s identification number suggests that the continued tax return preparation activity, together with the denial that it was underway, was not simply accidental or negligent. The Philadelphia Inquirer article notes that the preparer “has a master’s degree and kept up with annual tax-prep training.” Wondering if “master’s degree” meant an LL.M. (Taxation) or a Masters of Taxation, I checked and learned that he has an M.B.A. and not a tax degree. Yet one would think that “annual tax-prep training” would include warnings about the impropriety and illegality of claiming deductions and credits for which taxpayers are not eligible as well as the risks of getting caught and the consequences that flow from preparing and filing false returns.
Thursday, June 12, 2025
Tax Cuts for the Wealthy and Corporations: What Else is There to Say?