Tax fraud associated with income tax returns is a perennial pick for prosecution by the Internal Revenue Service (IRS). A recent case in New York City illustrates the pursuit of such cases and an outcome that could have been worse.
As we have discussed before, tax preparer fraud routinely finds a spot on the Dirty Dozen Tax Scam list prepared by the IRS each year. As a tax crime of opportunity, accountants and independent tax preparers are in a position to alter facts and figures on income tax returns with the cooperation of the taxpayer and sometimes not. When crews are stealing data and filing fraudulent tax returns, taxpayers become victims of identity theft. They are usually unaware their contact information has been compromised and a false tax return filed in their name. The object is an inflated tax refund that flows into the coffers of a shell company set up by the gang.
Many times though, tax preparer fraud occurs on a much smaller scale. This type of criminal tax fraud is perpetrated by one preparer or a preparer who owns a small business.
This was the case with a matter recently concluded in Brooklyn. The tax preparer, Maria Cuervo, was doing business as Danays Enterprises and Travel. Likely following an IRS criminal tax investigation, Ms. Cuervo was confronted with allegations of misdeeds regarding the preparation of tax returns. The IRS documented tax returns that reported fake exemptions and reductions in taxable income. Ms. Cuervo also fraudulently reported taxpayers as the heads-of-households and other fractions.
Basically, this is garden variety tax preparer fraud. Oftentimes these cases result in a monetary penalty, high restitution, and potential prison time. While we do not know the particular facts of this IRS prosecution, the defendant, Ms. Cuervo did not plead innocent but instead worked with the authorities to responsibly respond to the evidence against her.
Instead of a trial, Ms. Cuervo agreed to an injunction that permanently bars her from operating any business or service offering tax return preparation or services. In addition, Ms. Cuervo is required to pay over $150,000 in fees to the government that she received in exchange for her services. Most likely, Ms. Cuervo acted on advice from legal counsel and adroitly avoided restitution and any kind of prison sentence, suspended or otherwise. The injunction also dismisses the action with prejudice—meaning the matter cannot be reopened by the government.
Involvement in a criminal tax matter of any kind can lead to the loss of your career, financial stability, and liberty. If you know you are crossing the legal line, speak with an experienced criminal tax defense attorney to learn options to mitigate potential charges, or respond to allegations against you.
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Serving local and international clients from offices in Chicago and Cleveland, the legal team at Robert J. Fedor, Esq., LLC delivers strategic representation and guidance with compliance questions, tax litigation, or criminal tax defense. Call 800-579-0997 or contact us online today.