We frequently write about how a tax preparer — including CPAs, registered agents, and lawyers – are not above suspicion when it comes to matters regarding tax fraud or evasion. Whether the investigation body is an IRS examination, an IRS criminal investigation, or similar investigations by state agencies an individual’s status as a licensed professional does not protect or inoculate the individual from suspicion in any sense. In fact, because these individuals are familiar with the tax code and have the knowledge, ability, and opportunity to commit fraud impacting tens or hundreds of individuals they may even attract more scrutiny from examiners and auditors.
While tax preparer who plays fast and loose with their client’s tax obligations are routinely identified and prosecuted, they can unfortunately cause significant damage to their client’s before the fraud is recognized. The latest tax preparer to be identified as committing fraud unbeknownst to her clients is Rona Estelle Griffin who recently pleaded guilty to a 53 felony charges related to her tax fraud.
Rona Estelle Griffin appeared to run a modest tax preparing business out of a small Minnesota home. In this capacity she prepared taxes for hundreds of clients realizing “too good to be true” results for nearly all. In most cases, inaccurate filings that included overstated charitable contributions and business expenses achieved these extremely favorable results. In some cases she changed her client’s occupations on tax forms to make business expenses more reasonable. Reportedly, upon learning that many of her clients had been contacted for audits by the IRS she called a meeting at her home. At the meeting she apparently told the clients to purchase travel ledgers and create false records to support the deductions she had claimed.
Despite filing taxes for hundreds of people each year, Griffin herself was non-compliant with her filings. she failed to file tax returns for a number of years leading up to the indictment and guilty plea. In the 2010 and 2011 property tax refund filings she did submit, she misstated her income as less than $12,000 annually despite earning somewhere between $150,000 to $200,000 through her fraud. Charges against the tax preparer included:
The Tax preparer was also charged with theft.
On Friday, January 22, 2016, Rona Estelle Griffin Pleaded guilty to 17 counts of tax fraud. She faces a prison sentence of four years which will be determined at her sentencing currently scheduled for March 28, 2016. However, in this case the prison sentence pales in comparison to the liabilities likely to be owed by the former tax preparer. According to state prosecutors, the tax fraud resulted in more than $1.6 million is lost tax receipts. $500,000 of the liabilities have already been recovered and Griffin allegedly owes back taxes of at least $117,000.
Griffin apparently systematically targeted clients who generally lacked the means to detect her fraud. In some cases she reportedly told concerned clients who had received audit notices that the IRS “was out to get [her]; we’ll get you out of this.” She would then ask the clients to execute power-of-attorney authorizations so she could further conceal her fraud. One client, a forklift operator who paid $80 for tax services, had his occupation falsely reported by the preparer as a sales representative. Her claims of more than $10,000 in unreimbursed employee expenses has now created a back tax liability of approximately $3,500. For a different client, Griffin claimed that the client had realized a loss of $45,000 due to the sale of a rental home. In reality, the transaction was profitable and the client now owes just under $10,000 in unpaid back taxes.
Tax preparer who are facing charges can turn to the experienced and strategic tax defense attorneys of the Tax Law Offices of David W. Klasing. Likewise, taxpayers who are concerned about an underpayment of tax due to actions by their preparer can also turn to us when facing an IRS collections action. David W. Klasing is a dual-credentialed tax attorney and CPA who can take a multi-disciplinary approach to tax matters. To schedule a reduced-rate consultation with our experienced team, call 800-681-1295 today or contact us online.