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The U.S. Attorney’s Office for the Southern District of Mississippi announced on November 5, 2020 in a press release that Talvesha Glaude who owned and operated a tax return preparation business was sentenced to 22 months in prison for preparing false income tax returns and ordered to serve one year of supervised release and to pay restitution to the IRS in the amount of $183,360.

The Details

Talvesha Glaude of Moss Point, Mississippi owned and operated a tax return preparation business under multiple names, including TMG Tax Service and Regional Tax Service. From 2013 through 2019, Ms. Glaude prepared tax returns for clients seeking from the IRS inflated refunds based on fraudulent dependents, federal income tax withholdings, and education credits. In addition to preparing false returns for her clients, Ms. Glaude also filed false returns for herself for the tax years 2014 through 2018.

The conviction culminated what started from a comprehensive investigation conducted by the IRS Criminal Investigation Division which was then referred to the Tax Division of the U.S. Department Of Justice for prosecution.

Tax Preparer Penalties

Even with the possibility that a tax preparer can be subject to criminal prosecution, tax preparers face substantial civil penalties for failing to meet standards to their clients and what is imposed under the Internal Revenue Code.  Internal Revenue Code § 6694(a) imposes the standards that tax preparers must follow. Prior to the 2007 amendment to this Section, tax return preparer penalties applied to a person who prepared for compensation, a federal income tax return or claim for refund. The penalties did not apply to any other types of returns such as employment or estate tax returns. The former Section also included a $250 penalty for an income tax return preparer who knew or reasonably should have known, of the position that caused the understatement due to a frivolous position or an undisclosed position for which there was not at least a realistic possibility of being sustained on the merits. An income tax preparer engaging in willful or reckless conduct with respect to preparing an income tax return under the former Section was subject to a penalty of $1,000.

New Code §6694(a) as amended by the Small Business And Work Opportunity Tax Act of 2007 (the “Act”) extends to all types of federal tax returns, including estate and gift tax returns, employment tax returns, excise tax returns and returns of exempt organizations.

The Act now requires that the preparer have a reasonable belief that the tax treatment of the position is “more likely than not” the proper treatment. The penalty which can be imposed on the preparer is the greater of $1,000.00 or 50% of the income derived (or to be derived) by the preparer. For willful or reckless conduct, the penalty which can be imposed on the preparer is the greater of $5,000.00 or 50% of the income derived (or to be derived) by the preparer.

Other civil penalties that can be imposed against income tax returns preparers include:

• Failure by an income tax preparer to sign a required return. IRC § 6695(b).
• Failure by an income tax return preparer to furnish a required taxpayer identification number. IRC § 6695(c).
• Failure by an income tax return preparer to furnish a copy of the tax return to the taxpayer. IRC § 6695(a).
• Failure by an income tax return preparer to retain a completed copy of the return or a record of the taxpayer’s name, identification number, taxable year, and type of return prepared. IRC § 6695(d).
• Failure by an income tax return preparer to comply with the due diligence requirements with respect to determining a taxpayer’s eligibility for, or amount of, the earned income credit. IRC § 6695(g).
• Aiding and aiding and abetting the understatement of a tax liability. IRC § 6701.
• Disclosing or using any tax return information other than to prepare or assist in preparing the taxpayer’s return. IRC § 6713(a).

Even without bringing a criminal prosecution the IRS may seek to enjoin an income tax return preparer engaging in specific abusive practices or from acting as an income tax return preparer. IRC § 7407(a). An injunction may be issued if a court determines that the preparer has (1) engaged in conduct subject to a preparer penalty under §6694 or §6695, (2) engaged in conduct subject to a criminal penalty under the Internal Revenue Code, (3) misrepresented his eligibility to practice before the IRS, (4) misrepresented his experience or education as a preparer, (5) guaranteed the payment of any tax refund or the allowance of any tax credit, or (6) engaged in any other fraudulent or deceptive conduct that substantially interferes with the proper administration of the tax law; and that injunctive relief is appropriate to prevent the recurrence of such conduct.

 

What Should You Do?

If the IRS is considering a penalty against you as a professional you should seek immediate assistance from a qualified tax attorney at this earliest possible time.  The tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), San Francisco Bay Area (including San Jose and Walnut Creek) and elsewhere in California know exactly what to say and how to handle issues with the IRS as well as State Tax Agencies.  Our experience and expertise not only level the playing field but also puts you in the driver’s seat as we take full control of resolving your tax problems. Also, if you are involved in cannabis, check out what our cannabis tax attorney can do for you.  And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.

Florida Tax Return Preparer Found Guilty of Filing False Tax Returns and Theft of Government Funds

The U.S. Attorney’s Office for the Southern District Of Florida announced on November 6, 2019 in a press release that Paul Senat, age 39, the owner and operator of American Fast Services & Tax, American Justice Services & Tax and AM & PM Tax Services, located in Palm Beach County, Florida, was convicted by a federal jury for aiding and assisting in the preparation of false tax returns and theft of government funds.

Guilty Verdict.

According to the evidence presented at trial, from at least 2012 to 2016, Senat through his tax preparation business falsified his clients’ returns by reporting fictitious business losses and false education credits in order to fraudulently inflate their refunds.

Senat faces a statutory maximum sentence of 10 years in prison for theft of government funds and three years for each count of aiding and assisting in the preparation of false returns. He also faces a period of supervised release, restitution, forfeiture, and monetary penalties. A sentencing date has been set for January 27, 2020.

 

The U.S. Attorney’s Office for the Eastern District Of New York announced on March 5, 2019 in a press release that Afolabi Ajelero, the owner of Mo-Betta Ventures Inc., a tax preparation business located in Springfield Gardens, New York, was convicted by a federal jury for conspiring to commit aggravated identity theft and for two counts of aiding and assisting in the preparation of false tax returns.

Guilty Verdict.

According to the evidence presented at trial, Mr. Ajelero, conspired with others to possess and use without lawful authority one or more means of identification of another person. He also filed false corporate income tax returns for the 2014 and 2015 tax years for his business.

Ajelero faces a maximum sentence of five years for the conspiracy conviction and a maximum sentence of three years in prison for each count of aiding or assisting in the preparation of false returns. He also faces a period of supervised release, restitution, forfeiture and monetary penalties.

On February 15, 2019, co-defendant Hakeem Bamgbala pleaded guilty to 18 counts of wire fraud, 22 counts of aggravated identity theft, one count of conspiring to commit aggravated identity theft, and one count of aiding and assisting the filing of a false tax return. On July 31, 2018, co-defendant Michael Campbell pleaded guilty to conspiracy to commit aggravated identity theft. A sentencing date has not been set for Bamgbala and Campbell.

IRS announces arrests and indictments after two-week campaign to fight refund fraud and identity theft. 

The Federal District Courts should expect to see more of these cases as the IRS announced on March 20, 2019 the results of a national two-week enforcement and education campaign to combat refund crimes and identity theft that resulted in numerous legal actions against suspected criminals and businesses committing these crimes.

“Identity theft is a pervasive crime and stopping it remains a top priority of the IRS,” said IRS Commissioner Chuck Rettig. “The IRS, with the help of our Security Summit partners, continues to make progress in this area, but we need to continue our significant efforts to protect taxpayers and assist those who have been a victim of identity theft. We are fighting this problem with enhanced systems, smarter technology and the efforts of our dedicated workforce, including Criminal Investigation. We will retain our relentless, vigorous pursuit of those who prey upon others in this arena”.

Working with the Department of Justice Tax Division and U.S. Attorneys around the nation, IRS Criminal Investigation (CI) made 11 arrests, indicted 15 individuals and saw five other individuals or businesses sentenced who perpetrated some type of refund fraud or identity theft scheme.

“Millions of taxpayers put their trust in tax professionals to prepare accurate and lawful returns.

Unfortunately, a few bad apples take advantage of that trust for their own greed and profit,” said Don Fort, Chief of IRS Criminal Investigation. “CI’s special agents are highly skilled at unraveling fraudulent schemes. With our partners in other agencies and the private sector, we are dismantling these crooked enterprises and enforcing our tax laws”.

 

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