One Way or Another

Directly above view of concentrated accountant using calculator while preparing tax forms sitting on sofa

The Internal Revenue Service (IRS) lists 2,235 forms and publications. (It’s no wonder that the tax season is dreaded by so many. With that number of forms available, how in the heck do you know which one to use?) Perhaps this is why it is estimated that more than half of all individual tax returns filed are completed by paid tax preparers. A Bridgeport, Connecticut tax preparer recently convicted of tax refund fraud illegally used a combination of tax forms to claim about $11.26 million in refunds. (Unfortunately, the IRS paid around $10 million in refunds before his tax fraud scheme was halted.)

The Bridgeport tax preparer purportedly prepared approximately 1,820 federal tax returns over four tax years through his tax prep business. (To put it in perspective, those returns generated around an average of $6,187 per tax return.)

The fraudulent tax preparer carried out his tax refund fraud scheme by using fake Schedule C forms. (These are forms that deal with business profits and losses.) Further research reveals that the losses claimed totaled $22.2 million, which means that the IRS did not receive $6.2 million in taxes they were owed. He also threw in a few fake unreimbursed employee expenses and bogus charitable contributions to earn back a few more dollars.

The 62-year-old Bridgeport tax preparer pleaded guilty to tax refund fraud. He was sentenced to four years behind bars and one year of supervised release. He must also pay $1,501,000 in restitution.

The punishment doesn’t stop there though. (What about all of the individuals who paid the tax preparer to submit their erroneous returns?) You can be sure that the IRS will be informing the fraudster’s clients that they will need to amend their erroneous tax forms. (Lesson learned? Spend more time researching tax preparers and get recommendations. You’re going to pay one way or another.)

Today’s “Fraud of the Day” is based on an article, “Bridgeport Man Commits Massive Tax Fraud: Feds,” posted on on August 15, 2019.

BRIDGEPORT, CT — A Bridgeport tax preparer was sentenced to four years in prison followed by one year of supervised release, according to a statement from prosecutors. Rolando Russell, 62, was accused of preparing false tax returns for clients that resulted in $1.5 million in losses to the IRS.

In April, Russell pleaded guilty to two counts of aiding and assisting the filing of a false tax return.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.