Mother-daughter pair Elizabeth M. Jordan, 52, and Dolores A. Youmans, 30, who together operated a tax preparation business out of Jacksonville, Florida, are each facing a sentence of up to three years in federal prison after pleading guilty to aiding and assisting several clients with false tax returns, a federal felony offense known as “aid and assistance” which is prosecuted under 26 U.S. Code § 7206(2). This case demonstrates that not only can individual taxpayers land in legal trouble for submitting false financial information to the Internal Revenue Service (IRS) – so can tax professionals who use their knowledge to skirt the laws.
Florida Tax Preparers Plead Guilty to Felony Charges After Falsifying Tax Returns for Clients
Confronted by a daunting Tax Code, many taxpayers turn to professional tax preparers for financial guidance and peace of mind. Unfortunately, whether they are initiating the crime or acting at a client’s request, some tax preparers choose to use their knowledge to deliberately violate tax laws, often leading to the imposition of harsh penalties upon both parties.
Defendants Jordan and Youmans discovered this the hard way late last December, when both women “pleaded guilty to aiding and assisting others with the filing of fraudulent tax returns,” according to a press release issued by the Department of Justice (DOJ). Though a sentencing date has yet to be scheduled, both are at risk of being incarcerated for up to three years, which is the maximum sentence established by the relevant statute, 26 U.S. Code § 7206. In addition to the prison sentence, the statute also provides for a maximum fine of $100,000 (or, in the case of a corporation, $500,000).
Under 26 U.S. Code § 7206(2), the section which applies to this case, a taxpayer commits a felony when he or she “willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document.” In simpler terms, it is a felony to prepare a fraudulent tax return on behalf of another individual, precisely as Jordan and Youmans confessed to doing as part of their plea agreements.
According to the press release, “Jordan had been working as a tax preparer since approximately 1990. Since 2011, she was the owner and operator of a business that offered tax return preparation services. At the business, Jordan, Youmans, and others prepared individual income tax returns, with accompanying forms and schedules, on behalf of clients.” In this capacity, Jordan and Youmans supplied false information on multiple returns, notably the following incidents:
- In 2011, Jordan prepared and filed a false tax return on behalf of a client. Specifically, Jordan stated on the return that the client (1) spent approximately $4,000 on education costs, entitling the taxpayer to an education tax credit totaling $1,000, and (2) operated a business which had expenses totaling $34,755, but no income. In reality, the taxpayer neither spent funds on education nor owned a business, working, instead, as a wage-earning corporate employee.
Nonetheless, the false information caused the IRS to issue the taxpayer a refund totaling just over $10,000, when in fact the refund would not have exceeded $533 had Jordan supplied truthful information on the client’s return. Thus, the IRS incurred a tax loss totaling $9,488.
- In 2012, Youmans prepared and filed a false tax return on which she stated, following a similar pattern, that (1) the taxpayer dedicated $4,000 to educational expenses, entitling the taxpayer to an education tax credit of $1,500, and (2) the taxpayer owned a business with no income and expenses totaling $36,895. Once more, the press release notes, the client “was a wage-earning employee of a corporation, had not operated a business in 2012, and did not incur any education expenses during that year.”
In addition to misrepresenting the taxpayer’s business and education expenses, Youmans also stated that the taxpayer had, in relation to a trucking job, purchased over five thousand gallons of gasoline, entitling the taxpayer to a fuel tax credit of nearly $1,000. However, because the gasoline was in reality purchased by the taxpayer’s employer, the client was not in fact entitled to this credit.
The taxpayer received a tax refund totaling $16,469 as a result of the false information supplied on the return prepared by Youmans. In reality, the taxpayer was entitled to a refund of $5,182, amounting to a tax loss of $11,287.
Experienced Criminal Tax Defense Lawyers Representing Tax Preparers and CPAs
Regardless of whether an individual prepares his or her own tax return, or seeks the assistance of a tax professional, it is essential to ensure that all returns and associated documents are timely filed with pinpoint accuracy and careful attention to detail. When willful violations or negligent errors are alleged, the stakes are especially high for tax preparers and CPAs, who are held to extremely rigorous professional standards.
If you are under audit or criminal investigation in connection with tax preparer fraud, claiming false deductions, falsifying income to claim tax credits, income tax evasion, or other matters related to tax fraud, it is imperative that you contact a criminal tax defense attorney immediately. Cases of this nature are highly time-sensitive, making swift and strategic action essential. It may be possible to avoid or greatly mitigate the penalties you face, but with each day you delay, the fewer paths to resolution will remain open.
Don’t lie awake at night worrying about an IRS tax audit, a concern about possible noncompliance, or other tax issue. Instead, turn to an experienced tax attorney from the Tax Law Office of David W. Klasing for dedicated, dependable legal support. To arrange a confidential, reduced-rate consultation, contact our law offices online, or call us at (800) 681-1295 for phone assistance.
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What is an effective tax defense in an IRS eggshell tax audit?
https://www.youtube.com/watch?v=7qixPqWTtvA
So, you cheated on your taxes and you are under a tax audit…
https://www.youtube.com/watch?v=FZce4jqQJpI
Why should I hire a tax attorney to represent me in a tax audit?
https://www.youtube.com/watch?v=NDwc4GUfBX8
Foreign income and information non-compliance
