Twin Cities Tax Preparer Charged in Million Dollar Scheme

Published On: 26th February 2015

From the internet

The charges include 55 felonies in a tax scheme that authorities say cheated taxpayers and the State of Minnesota out of $1.7 million.

A Hennepin County attorney said that it is possibly the largest tax fraud case that had ever been filed by his office.

In the criminal report, the female tax preparer prepared hundreds of individual and business tax returns through a tax preparation company owned by her. Prosecutors allege that the woman exaggerated her clients’ charitable contributions, changed the occupations of some of the individuals she filed taxes on, and falsified business expenses for business clients.

Investigators found that, although many of the tax clients didn’t contribute anything to charity or the amounts were minimal, she would report on their tax forms that they contributed ten percent of their income to a charitable organization. The organizations that she claimed they contributed to were churches that they never attended.

Authorities say that the scheme did save thousands of dollars in taxes for the clients, but the state had to pay and now those individuals just might have to pay as well.

Although these taxpayers did come out better in the end, although not legitimately, there is a certain degree of trust that exists between a taxpayer and their tax preparer because of the information that an individual has to give their tax preparer.

A Revenue Commissioner said that the Department of Revenue works hard to ensure that everyone, including taxpayers, follow the tax laws, as the role by the Department is taken very seriously.

Prosecutors also allege that the woman did not pay taxes on her business and her own income, which is said to be around $200,000 per year. Plus, her clients face having to repay the thousands in back taxes that they incurred because of her dishonesty on their tax returns. Unfortunately, they are held responsible for the thousands of dollars that they didn’t pay because of the fraud. Nonetheless, they could file suit against the tax preparer, but it could be a long time before they would see money, if any at all.

The joint investigation that was conducted by the Hennepin County Attorney and the Minnesota Department of Revenue occurred between 2009 and 2013 and it is estimated that the damage to the state is up to $1.7 million. It was in early 2012 when the tax preparer hit the radar of the Revenue Department and they began reviewing the tax returns that were prepared by the woman. They found a pattern of malfeasance, according to the criminal complaint. The charitable donations of her clients were obviously too high and employee expense reimbursements were questionable.

So far, the Revenue Department has recovered $500,000 of the money that the preparer defrauded the state out of. It is said that the overall cost to taxpayers is significant in that there is the money that the state was defrauded out of and there is the fact that hundreds of hours have been used to unravel the case.