Tax Fraud Blotter: Uneasy riders
The Magic is gone; rent to scam; imprecision; and other highlights of recent tax cases.
Montgomery, Alabama: Tax preparer Alisaya Danita Thompson-Dixon, 44, has been sentenced to 37 months in prison to be followed by a year of supervised release for aiding and assisting in the preparation of false income tax returns.
Thompson-Dixon operated a tax prep business under the name Magic Tax Service and admitted to assisting in filing false returns on at least two occasions.
In February 2016, she helped a client file a return that falsely claimed business income of $2,150 while claiming $67,107 in expenses. She knew the client was not entitled to claim any business income or expenses; this resulted in a loss of $11,294 to the IRS. Thompson-Dixon also admitted to helping file an illegal return in January 2018, when she claimed false business revenue and expenses for a client that resulted in a tax loss of $10,499.
She was also ordered to pay a $100,000 fine and $21,793 in restitution to the IRS.
Markham, Illinois: A federal court has permanently enjoined two Chicago-area tax preparers from preparing returns for others and from owning or operating any tax prep business in the future.
The civil complaint alleged that Patricia Rivers, of Country Club Hills, Illinois, her daughter-in-law, Ki’esha Gary, of South Holland, Illinois, and her company, Alpha II Omega Tax, prepared federal income tax returns that made fraudulent claims to reduce clients’ tax liabilities and increase their refunds. Primarily, the scheme involved fabricating sole proprietorship business losses.
The complaint also alleged that Rivers, Gary and Alpha II Omega inflated clients’ tax refunds by reporting false charitable donations and exaggerated or bogus unreimbursed employee expenses, bogus rental deductions, inflated tax withholding and overstated education credits.
Rivers was alleged to have at least once falsely reported her own home address as a rental property to generate losses on her client’s income tax return. Another client alleged that Rivers amended a client’s return without consent to retaliate against her by increasing her tax liability.
The court found that the tax loss to the government from the 2018 returns of 38 clients of Rivers was $278,461 and that, given that this was “only a small number of the thousands of income tax returns prepared by Rivers,” the actual loss to the United States was likely much higher.
The court also found that Rivers repeated and continuously prepared income tax returns in a manner that violates federal law.
Tampa, Florida: Tax preparer Abdul Aziz has pleaded guilty to one count of aiding in the preparation and filing of a false return.
Aziz helped to prepare numerous fraudulent income tax returns for clients in 2016. Those returns contained false information about clients’ income and their tax withholding status. The false entries in those returns related to residential mortgage loan repayments that the returns falsely represented as being held on their behalf by financial institutions and were claimed as income.
His clients were able to claim and receive undeserved federal refunds exceeding $1.5 million.
Aziz faces up to three years in prison.
Baton Rouge, Louisiana: Wayne Triche has pleaded guilty to wire fraud and tax fraud.
Triche was responsible for managing a portion of the New Orleans Firefighters Pension and Relief Fund’s investments. Rather than return the profits earned to the fund, he embezzled some $937,658.77 and spent the money for personal expenses such as a civil court judgment, credit card charges and gambling.
The tax fraud charges stem from his failure to claim the embezzled funds on his personal income tax returns, resulting in federal tax due of $329,895.
Sentencing is June 14. For tax fraud, Triche faces a maximum of three years in prison, a fine of up to $100,000, up to one year of supervised release and a mandatory $100 special assessment fee. For wire fraud, he faces a maximum of 20 years, a fine of up to $250,000, up to three years of supervised release following any term of imprisonment and another $100 fee.
Colorado Springs, Colorado: James M. Robar, a former managing director for a defense contractor, has pleaded guilty to tax evasion.
From 2010 through 2019, Robar did not timely file federal returns. Beginning around February 2012, he was employed by a U.S. Department of Defense contracting company, eventually serving as its managing director starting in 2015.
In 2016 and 2017, Robar evaded taxes by having his employer hold his bonus payments in an offshore corporate bank account rather than have those funds transferred to his domestic account. In 2019, after receiving a $1 million bonus from his employer, Robar purchased two properties at a total cost of slightly more than $1 million, and he titled both properties solely in his spouse’s name.
In total, Robar did not report some $5.5 million in compensation from 2012 through 2019, causing a tax loss to the government of more than $1.5 million.
He is the second defendant associated with the defense contracting company to recently plead guilty and faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Nampa, Idaho: Nicole Beth Howerzyl has been sentenced to a year and a day in prison for failure to account for and pay over employment tax.
From about 1999 to 2019, Howerzyl was a corporate officer for Dave’s Motorcycle, which sold and serviced motorcycles. Howerzyl handled the bookkeeping and exercised control over the company’s financial affairs, including approving all payments and controlling all bank accounts.
For calendar 2013 to 2019, Dave’s employed some 20 people per year. Howerzyl directly issued payroll checks twice per month and withheld payroll taxes from employees’ paychecks. She also issued annual W-2s to the employees.
She knew her responsibility to collect and pay over payroll taxes to the IRS and to file a 941 following the end of each quarter, but Dave’s made no payments to the IRS for 2013 to 2019 and failed to file 941s.
For tax years 2013 to 2019, Howerzyl failed to account for $4,874,572.73 in wages at Dave’s and to pay over $1,161,135.25 in federal payroll taxes.
Howerzyl, who pleaded guilty in December, was also ordered to pay $373,552.21 in outstanding restitution to the IRS and a separate $10,000 fine, and to serve a year of supervised release following her prison sentence.
Houston: Tax preparer Mario Clark has been sentenced to 25 months in prison to be followed by one year of supervised release for preparing and filing false income tax returns.
Clark admitted that he prepared fraudulent returns for clients under a business known as Precision Tax Group. The false income tax returns caused a total federal tax loss of $203,336.
In returns prepared for himself and others, he made false claims for business income loss, unreimbursed employee expenses, itemized deductions and gifts by cash or check.
Clark, whose criminal history includes convictions for murder, battery and aggravated robbery, was further ordered to pay $203,336 in restitution to the IRS.
Tampa, Florida: Tax preparer Eugene Fanfan has pleaded guilty to one count of aiding in the preparation of filing a false return.
Fanfan helped prepare numerous false and fraudulent income tax returns on behalf of clients in 2016. Those returns contained false information about clients’ business income and loss, as well as false claims relating to the American Opportunity Credit. Fanfan’s clients received more than $100,000 in undeserved federal refunds.
He faces a maximum of three years in prison.
