Creative Tax Fraud

[kcjenkins]

This one shows some real creative thinking. He helped two client businesses reduce their taxes by making up bogus 1099s, which is not that unusual. What was 'creative' was that he then used those bogus 1099s to create bogus returns for other clients to get them bogus EITC. This went on for 5 years. I'm really curious how he got caught.

Columbus, Ohio: Preparer Fatma Ali, 39, has been charged with two counts of conspiracy to defraud the IRS and 48 counts of willfully aiding and assisting in the preparation and filing of false federal income tax returns, and was among five individuals indicted in a conspiracy to defraud the IRS with false returns.

According to the indictment, Ali, a preparer for Speedia Tax Services, joined another of the indicted individuals in allegedly helping to prevent the IRS from computing and collecting income taxes from the local company Health Empowerment Partners LLC, between January 2011 and March 2012, and joined with two other indicted individuals in a similar scam involving taxes of the local company Better Home Care Services Inc., between January 2008 and October 2011.

Ali allegedly created false 1099s in the names of “other” taxpayers that claimed a portion of the income actually earned by the individuals from BHCS and HEP, helping under-report AGIs. Also, amounts claimed on the false 1099s were reported as deductible business expenses.

Although the “other” taxpayers did not actually receive the income shown on the false 1099s, Ali allegedly prepared returns for them that claimed this income as their own, enabling unwarranted tax credits.

Between April 2008 and April 2012, Ali allegedly prepared false 1099s reflecting income received and expenses claimed by employees of BHCS and HEP that were included with the returns for persons not employed by those companies.

Conspiracy to defraud the IRS carries a maximum of five years in prison and a fine of up to $250,000. Willfully aiding and assisting in the preparation and filing of false federal income tax returns with the IRS carries a maximum of three years in prison and a fine of up to $250,000.