Call Now (800) 681-1295

Florida Tax Preparer Sentenced to 2 Years in Prison After Defrauding IRS Out of $1.3M

Table of Contents

    The owner of a tax preparation service was recently sentenced to 24 months in federal prison for felony tax fraud involving inflated refunds, according to a Department of Justice press release. Nichole Johnson, 37, of Jacksonville, Florida, pleaded guilty last summer to aiding and assisting false tax returns (26 U.S. Code § 7206(2)), a felony offense commonly referred to as tax preparer fraud. By preparing and filing over 1,900 falsified returns, Johnson defrauded the Internal Revenue Service out of “more than $1.3 million in [the form of] undeserved refunds,” which were issued as a direct consequence of the information she provided.

    See our Criminal Tax Law Q and A Library

    Jacksonville Return Preparer Ordered to Repay IRS $1.3M After Committing Tax Fraud

    Appearing before U.S. District Judge Marcia Morales Howard in Florida district court in December, Johnson was sentenced to two years in prison “for aiding and assisting in the filing of a false tax return,” according to the DOJ. Johnson, previously the owner of a Jacksonville tax preparation business called Financial Asset Tax Service, knowingly falsified various items on numerous returns she filed and prepared over the four-year tax period from 2014 to 2017. By preparing and filing approximately 1,900 falsified returns during this time, Johnson obtained roughly $1.3 million in improper tax refunds on behalf of clients, making the average refund per falsified return approximately $684.

    Johnson utilized several methods to commit tax fraud. One method, for instance, was to inflate itemized deductions, which – when used properly – enable certain taxpayers to substantially reduce their taxable income, in some cases providing an advantage over the standard deduction. By completing and filing Schedule A, Form 1040 (Itemized Deductions), which should be attached to the taxpayer’s income tax return, a taxpayer can deduct medical expenses, dental expenses, home mortgage interest, and other expenses. If a taxpayer or tax preparer exaggerates (or outright fabricates) these expenses, he or she may be prosecuted for tax fraud, as this case demonstrates.

    In addition to falsifying deductions, Johnson also “fraudulently claimed the General Business Credit… for taxpayers who were not entitled to [it],” according to the DOJ. The General Business Credit (GBC), which you can read more about here or here, enables eligible taxpayers to combine separate tax credits (such as the New Markets Credit), carrying the total amount forward a certain number of years.

    (Note: The GBC is just one of numerous business tax credits offered by the IRS. If you own a small business or online business, our corporate tax attorneys can help you determine whether you might qualify for the GBC or related business tax credits. To claim the GBC, taxpayers file Form 3800 (General Business Credit), which should be attached to the taxpayer’s Form 1040.)

    Per 26 U.S. Code § 7206(2), the maximum sentence for aiding and assisting false returns is 36 months in prison (per count), one year longer than the sentence Johnson received. The statute also sets forth criminal fines of up to $100,000 – or, for corporations, up to five times that amount. According to the Department of Justice, Johnson was ordered to pay restitution equal to the amount of the tax loss caused by her crimes: approximately $1.3 million.

    IRS Tax Fraud Defense Attorneys Providing Assistance with Criminal Tax Exposure for CPAs

    Our tax office provides assistance with criminal tax exposure for CPAs and other tax professionals, delivering aggressive and effective legal support. Serving Northern and Southern California, our seasoned tax fraud defense attorneys defend accountants, bookkeepers, tax preparers, and others against felony and misdemeanor charges involving conspiracy, false or fraudulent statements, aiding and abetting tax fraud, and other forms of return preparer fraud.

    With over 20 years of tax experience, including unique dual experience as a practicing tax attorney and accountant, founder David W. Klasing is highly skilled in obtaining favorable resolutions in high-stakes, high-pressure cases. We may be able to mitigate penalties, or even help you avoid prosecution by making a voluntary disclosure or taking other corrective actions. If you are  seeking a counsel who can point to an extensive record of positive results, look to the Tax Law Office of David W. Klasing to supply the advocacy you need. Our IRS tax fraud defense lawyers are prepared to advise you, protect your rights, and fight aggressively on your behalf. Contact our law offices online right away to arrange a reduced rate consultation or call the Tax Law Office of David W. Klasing at (800) 681-1295.

    Note:  As long as a taxpayer that has willfully committed tax crimes self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax prosecution, the taxpayer can be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously receive a break on the civil penalties that would otherwise apply.  It is imperative that you hire an experienced and reputable tax defense attorney to take you through the voluntary disclosure process.  As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results.   See our Testimonials to see what our clients have to say about us!

    In addition to our staffed main offices in Irvine,  the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los AngelesSan BernardinoSanta BarbaraPanorama CityOxnardSan DiegoBakersfieldSan JoseSan FranciscoOakland, Carlsbad and Sacramento.


    Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship.  With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link.   Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.

    Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company?  Absolutely not!  See our policies that address this issue here.

    Tax Help Videos

    Representing Clients from U.S. and International Locations Regarding Federal and California Tax Issues

    Main Office

    Orange County
    2601 Main St. Penthouse Suite
    Irvine, CA 92614
    (949) 681-3502

    Our headquarters is located in Irvine, CA. Our beautiful 19,700 office space is staffed full-time and always available for our clients to meet with our highly qualified and experienced staff of Attorneys, Certified Public Accountants and Enrolled Agents. We also offer virtual consultations and can travel to meet with clients in one of our satellite offices.

    Outside of our 4 hour initial consultation option, we do not charge travel time or travel expenses when traveling to one of our Satellite offices, or surrounding business districts, where it is necessary to meet personally with taxing authority personnel, make court appearances, or any in person meeting deemed necessary for the effective representation of a client. To make this as flexible, efficient, and convenient as possible, David W. Klasing is an Instrument Rated Private Pilot and Utilizes the Firms Cirrus SR22 to service client’s in California and in the Southwest by air. Offices outside these areas are serviced via commercial jet airlines. None of these costs are charged to our clients.

    Satellite Offices

    (310) 492-5583
    (760) 338-7035
    (916) 290-6625
    (415) 287-6568
    (909) 991-7557
    (619) 780-2538
    (661) 432-1480
    (818) 935-6098
    (805) 200-4053
    (510) 764-1020
    (408) 643-0573
    (760) 338-7035
    (602) 975-0296
    New Mexico
    (505) 206-5308
    New York
    (332) 224-8515
    (512) 828-6646
    Washington, DC
    (202) 918-9329
    (702) 997-6465
    (786) 999-8406
    (385) 501-5934