What Happens when You Get Caught Filing a Fraudulent Tax Refund?

Attorney complicit in client's tax evasion pleads guilty
March 27, 2014
100
Tax Preparers: Who May Be Liable, and For How Much
March 27, 2014

What Happens when You Get Caught Filing a Fraudulent Tax Refund?

Richard Kellogg Armstrong, age 77 was just sentenced to 9 years in federal prison plus three years of supervised release at the end of his sentence. In addition he was fined $1,021,500 as sanctions for 10 separate and distinct acts of contempt of court. He was also ordered to pay restitution to the Internal Revenue Service (IRS) in the amount of $1,678,834 and to forfeit two personal residences and a personal aircraft.

Curtis L Morris (tax preparer), and Richard Kellogg Armstrong (client turned promoter) devised a scheme to defraud and to obtain money and property by means of false and fraudulent material pretenses and representations from the Internal Revenue Service (“IRS”), through the submission of false claims for federal income tax refunds, as part of individual federal income tax returns filed with the IRS, that were based upon and supported by false and fictitious information about federal income taxes purportedly withheld on original issue discount income, as set forth in the federal income tax returns and as purportedly reflected on IRS Forms 1099-OID filed with the IRS.

Armstrong, who was one of Morris’ tax clients, received more than $1.6 million from bogus returns and hid the proceeds in offshore bank accounts while recruiting for and promoting the scheme.

This case is evidence that being of advanced age will not prevent a criminal prosecution and or fend off incarceration. The preparer here also has his own problems…