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DOJ Targets Chicago-Area Tax Preparer After Suspected Tax Return Fraud

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DOJ Targets Chicago-Area Tax Preparer After Suspected Tax Return Fraud

According to a Department of Justice press release, a Chicago-area tax preparer has become the target of government efforts after allegedly helping a multitude of taxpayers file fraudulent tax returns. Considering that tax season is in full swing, it is critical to understand the severe consequences that could arise if you are caught cheating on your taxes because it’s not just your tax preparer that can go to jail. If you have failed to file your individual or business tax return for one or more years, or have taken a position on a tax return with respect to items of income, deduction, or credits, that would not hold up under the scrutiny of an IRS or state tax audi, examination or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney as soon as possible to discuss your options to come into compliance.

Tax Preparer Allegedly Fraudulently Inflated Business Losses and Educational Credits

Court records reveal that Gretchen Alvarez, aka Gretchen Trejo owns and operates her tax preparation business under the name Sick Credit Repair Tax and Legal Services. The IRS and Department of Justice allege that Alvarez assisted a multitude of taxpayers to lower their tax liabilities artificially and illegally. The action filed in federal court is not a criminal charge, but rather an attempt to have a federal court order her to stop aiding clients file tax returns.

The Department of Justice and the IRS have uncovered evidence that suggests that Alvarez lowers her clients’ tax liabilities by creating fictitious business losses, arising from “side businesses” that do not exist. These losses are used to fraudulently offset income that would have been otherwise subject to taxation. Additionally, federal authorities believe that Alvarez’s preparation methods include claiming that taxpayers attended educational institutions that they have never attended to fraudulently procure tax credits related to higher education costs.

The IRS and Department of Justice have admitted that they do not have a clear picture of the extent of Alvarez’s fraudulent preparation business because she allegedly fails to identify herself as a paid preparer on the face of the tax return or use an IRS-issued tax preparer identification number. Again, this effort by the Department of Justice and the IRS is not criminal in nature, yet. As additional evidence is gathered, criminal charges could (and likely will) be filed.

Coming into Tax Compliance Before It Is Too Late

Many Americans believe that small lies on their tax return will go undetected and that their wrongdoing does not truly hurt anyone. Although it is true that a single taxpayer’s misdeed will likely not cause the U.S. tax system to crumble, when millions of like-minded taxpayers attempt to employ the same tactics, the tax base is eroded quickly. To combat this, the IRS has employed the use of advanced data analytics tools to try to automate the detection of noncompliance that includes potential tax crimes. Additionally, the IRS has ramped up hiring of agents who can run audits and readily discover tax fraud.

If you have failed to live up to your obligations under the U.S. tax law, either by failing to file a timely U.S. tax return on an annual basis or by being untruthful about your true earned income, deductions, or credits, you should contact an experienced tax defense attorney as soon as possible to determine your options to come into compliance. With the help of a seasoned tax lawyer, you will establish the pertinent facts of your case and work together to identify an agreeable strategy to address your tax exposures, all the while keeping your physical and financial freedoms top of mind. While you are represented by a tax defense lawyer, you will never have to go up against the IRS alone.

Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!

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