A New Jersey tax preparer was arrested this week for allegedly filing false returns on behalf of his clients and claiming millions of dollars in fraudulent tax credits.
John Doe, a self-employed accounting and tax preparation specialist in North Brunswick, New Jersey, is facing up to 10 years in prison and a fine of up to $250,000 for filing more than 2,300 false federal income tax returns between 2011 and 2019. The IRS alleged that he fraudulently claimed $124 million in tax credits.
Motivation
The IRS alleges that Doe motivated his clients to file false claims in order to increase his fees. He allegedly charged clients a fee of ten to fifteen percent of any tax refunds.
Methods of Fraud
According to the federal complaint, Doe’s methods of fraud included:
- Disguising sources of income. Doe allegedly had clients disguise their income sources by claiming income from businesses they did not own or operate.
- Falsifying information. Doe allegedly falsified information about a client’s business structure and falsely claimed deductions related to the business.
- Fictitious businesses. Doe allegedly created fictitious businesses for clients in order to obtain tax credits and deductions.
- Inflating deductions. Doe allegedly inflated deductions such as employee salaries, rent, meal costs, travel costs etc.
Consequences
Doe is expected to face federal criminal charges for filing false returns and could face up to 10 years in prison if convicted of the charges. In addition, the government could attempt to recover the $124 million in fraudulent tax credits.
The arrest is a stark reminder of the seriousness of tax fraud and the potential consequences for those caught evading taxes. If you think you may be at risk for tax fraud, it is recommended that you seek the advice of a legal or tax professional.
