A Taxing Affair

25307069 - blank income tax forms american 1040 individual income tax return form

Having and managing debt can be stressful, and sometimes you just need some help. Unfortunately, whenever there is money involved, you need to be careful from whom you solicit that help. (As my mother would say, ”I’m not judgmental…I’m choosy!”) The Charlotte Observer reports that a group of North Carolina residents learned this lesson the hard way, when a pair of criminals saw opportunity in ”helping” people file their tax returns.

The Observer details how pair of scammers, a man and a woman, solicited ”clients” holding debt—such as car loans or mortgages—and offered them tax return preparation and filing services. After they had gotten access to people’s information and began preparing their returns, they falsely, and intentionally, listed debts as personal income, to inflate the forthcoming refunds. (If only getting rid of debt was this easy.) When all was said and done, the pair filed a total of sixteen fraudulent tax returns that falsely claimed upwards of $4 million in refunds. They charged the clients wildly inflated filing fees, ranging from $2,500-$5,000.

The Criminal Investigation Division of the Internal Revenue Service’s Charlotte Field Office nabbed the two and prevented them from exploiting even more people. Both defendants pleaded guilty to conspiracy to defraud the United States. (A rough translation of ”conspiracy to defraud the United States” reads: serious trouble securing gainful employment later in life.) The man was sentenced to 41 months in prison (about three and a half years) and ordered to pay restitution to victims—including the government—totaling nearly $25,000. The woman received a 20-month prison sentence.

Identity theft during tax filing season may be grabbing all of the headlines these days, but don’t forget to watch out for regular scammers, too.

Source: Today’s ”Fraud of the Day” is based on, ”Charlotte man sentenced in $4 million tax fraud scheme,” written by Joe Marusak and published by The Charlotte Observer on March 22, 2016.

A Charlotte man was sentenced to three years, five months in federal prison this week for his role in a $4 million fraudulent tax return scheme.

Daniel Heggins, 44, and Joan Clark, also of Charlotte, pleaded guilty in November to conspiracy to defraud the United States. Clark was sentenced in February to a year and eight months in prison.

According to court documents and statements in court, the pair conspired to defraud the government by filing false tax returns.

Heggins recruited people with debts, such as home mortgages or car loans, and created false Forms 1099-OID falsely characterizing the amount of the debts as income, prosecutors said.

Heggins charged clients bogus filing fees of $2,500 to $5,000.

Sixteen false tax returns claiming more than $4 million in fraudulent refunds were filed with the IRS office in Charlotte, court records show.

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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.