The IRS’s criminal division recently convicted two Floridian tax preparers of fabricating deductions on their client’s tax documents to reduce their tax burdens. Essentially, the pair invented business expenses for the purpose of reducing the overall tax burden of their clients. The IRS estimated that they lost nearly $3 million in revenue from the scheme.
The main ringleader has been sentenced to 45 months in federal prison and an associate will serve a 40-month sentence. The ringleader will be required to pay more than $400,000 in restitution while his associate will repay over $200,000.
Understanding fraud charges
Fraud is a generic category of offense that involves using trickery to unjustly enrich yourself. In other words, you lie to someone so you can take their money. If you just take their money, that’s robbery or theft. If you trick them, it’s fraud. While fraud is not as serious as armed robbery, it’s quite a bit more serious than simple theft and other related offenses. In fact, fraud tends to be prosecuted more harshly than similar theft-related crimes because of the element of premeditation involved.
In this case, both defendants were essentially lying to the IRS about their client’s expenses. These expenses would reduce the overall amount of taxable income they had. That reduced their overall tax burden.
When you commit fraud against the IRS, it’s called tax fraud. If you commit fraud related to healthcare services, it’s healthcare fraud. If you commit fraud using electronic means, it’s wire fraud. If you commit fraud against a bank, it’s bank fraud.
The anatomy of a fraud conviction
Not all fraud schemes start out as evildoers looking to harm others. In some cases, you have a business person who is acquiring clients by offering discounts or promising to save them money. They review the tax documents, but alas, there are no more deductions to claim. Having made the promise, they fabricate a deduction and tell the client that they saved them 5%. The client is happy. They don’t know how the business worked its magic, but they’re paying less money, so they’re happy. Since the scheme worked once, it will surely work again. Suddenly, the company is getting really good feedback for their services.
In this case, however, the two became aware that they were under investigation. Instead of stopping the fraud, they simply listed other individuals as the preparers. If the IRS had flagged any return in which their company was listed, the trick would then be to list a different company. It didn’t work. In fact, it likely made their situation worse because there was a second element of fraud or deception. So, while it’s really easy to get a rush out of improving your business, it can be really hard to stop when you have to.
Talk to a West Palm Beach Criminal Defense Attorney
The Skier Law Firm, P.A. handles white-collar criminal cases and fraud cases. Call our West Palm Beach criminal attorneys today to set up an appointment and we can begin preparing your defense immediately.