Tax Preparer in California Faces Prison Sentence for Role in Tax Fraud Scheme

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The majority of tax preparers assist individuals and businesses in accurately completing and filing their tax returns according to federal and state tax laws and regulations. In some unfortunate cases, tax preparers can become unwitting accomplices or active participants in tax fraud schemes. These schemes often involve falsifying information on tax returns, creating fraudulent deductions, or knowingly assisting clients in evading taxes through deceptive/evasive practices.

For example, a tax preparer in California was recently sentenced to prison for their role in a complicated tax fraud scheme. Anton Nguyen produced fraudulent federal income tax returns using compromised identities acquired by a corrupt social worker. For his actions, Nguyen faces a 41-month prison sentence.

If you suspect that your tax preparer may be engaged in illegal activities, seek support and guidance from our Dual-Licensed Tax Lawyers & CPAs at the Tax Law Offices of David W. Klasing by calling (800) 681-1295 or scheduling a reduced rate initial consultation online here to fix the noncompliance without facing criminal tax prosecution.

Owner of Tax Preparation Company Sentenced to Prison in California

In a significant legal development, Anton Nguyen, the owner of a Westminster-based tax preparation business, has been handed a 41-month federal prison sentence. This judgment arises from his active participation in a sophisticated scheme masterminded by a corrupt social worker, John Tran, aimed at identity theft for the illegal acquisition of tax refunds, welfare benefits, and credit cards. U.S. District Judge James V. Selna presided over the sentencing, which also included a restitution order of $3.77 million. Nguyen’s guilty plea in April at Santa Ana federal court included a single charge of conspiring to defraud the United States.

Nguyen’s Involvement

Nguyen’s involvement intertwined with Tran’s malevolent activities, as the latter exploited his position as a caseworker to pilfer his clients’ personal information, many of whom were recent immigrants. This elaborate operation ran from August 2010 to June 2019, during which Tran and his associates illicitly procured funds from government agencies and financial institutions using the stolen details. Simultaneously, Nguyen owned and operated Century Travel & Tax, a tax preparation company, and joined the conspiracy in 2012. He employed the purloined identities furnished by Tran to fabricate counterfeit tax forms, falsely indicating payments made to identity theft victims by various companies, including those under Tran’s control.

Nguyen’s role was pivotal in producing fraudulent federal income tax returns using these compromised identities. He even utilized the falsified payments on the fabricated tax forms as income for the identity theft victims, leading them to seemingly qualify for tax credits such as the Earned Income Tax Credit and the Child Tax Credit. This deceptive practice prompted Nguyen’s clients to report these payments as business deductions, thus reducing their taxable income. In exchange for his assistance in generating these deceitful tax forms, Nguyen’s clients paid him a fee.

Consequences of the Scheme

The U.S. Attorney’s Office unveiled the extensive scope of Tran and his co-conspirators’ tax-related misdeeds. They fraudulently filed 433 tax returns with stolen personal information, yielding at least $973,153 in wrongfully obtained tax refunds from the U.S. government. Cumulatively, Nguyen, with the support of his accomplices, managed to swindle the federal government out of a minimum of $3.77 million in owed taxes. The prosecution emphasized the intricate nature of the tax evasion plot, underlining how civil servants’ misuse of personal information was a crucial element, facilitated by tax preparers like Nguyen.

The culmination of this legal saga has seen not only Nguyen’s sentencing but also the convictions of eight other individuals implicated in this extensive conspiracy. The case serves as a stark reminder of the sophistication and far-reaching consequences of identity theft schemes, highlighting the importance of robust legal actions to combat such fraudulent activities.

If you suspect that your tax preparer may be engaged in illegal practices, then you should immediately seek guidance and support from our Dual-Licensed Tax Lawyers & CPAs. Our team can help determine the appropriate course of action in your specific case. Accordingly, you may be able to avoid facing criminal penalties similar to those faced by Nguyen.

Common Forms of Tax Fraud Perpetrated by Tax Preparers

Tax preparers can be involved in many different types of tax fraud schemes. You should seek assistance if you suspect that your preparer may be engaged in any of the following:

Creating Fictitious Deductions

Tax preparers may engage in tax fraud by inventing fictitious deductions to reduce their clients’ taxable income. In this scheme, they might fabricate or exaggerate expenses, such as business costs, charitable donations, or unreimbursed employee expenses, without proper documentation. By inflating deductions, the tax preparer helps clients lower their tax liabilities, which can lead to fraudulent refunds or reduced owed taxes. This type of fraud undermines the accuracy of tax returns and can be perpetuated by submitting false receipts or invoices to support the fabricated deductions.

Underreporting Income

Tax preparers involved in intentional underreporting taxable income fraud manipulate the reported income of their clients to decrease their tax liabilities. This could involve omitting certain sources of income, especially cash transactions, or intentionally reporting lower earnings than what was actually received. Tax preparers may collude with clients to underreport income, falsifying records and financial statements to create a false appearance of reduced earnings. By deliberately misrepresenting income, these individuals contribute to inaccurate tax returns and potentially substantial financial losses for governments.

Fabricating Business Expenses

In this scheme, tax preparers assist clients in creating fictitious business expenses to reduce their taxable income. By inflating or inventing expenses related to business operations, travel, entertainment, or equipment purchases, tax preparers contribute to fraudulent deductions. This artificially lowers the reported profit of the business, leading to decreased tax liabilities. The tax preparer may forge receipts, invoices, or other documentation to support these fraudulent expenses, contributing to a distorted financial picture and evading rightful tax payments.

Identity Theft and Refund Fraud

Tax preparers can also be involved in more complex schemes like identity theft and refund fraud. In collaboration with clients or other co-conspirators, they may use stolen personal information to file false tax returns on behalf of unwitting victims. These fraudulent returns claim inflated refunds, often using fabricated income and deductions. Tax preparers play a pivotal role in processing these returns, facilitating the receipt of fraudulent refunds. This scheme involves intricate planning and can result in significant financial losses for both the government and the victims whose identities were stolen.

Abusive Tax Shelters

Tax preparers can participate in abusive tax shelters by promoting and implementing arrangements that exploit the tax code’s complexities. These schemes often involve complex financial transactions designed to create artificial losses or deductions that offset legitimate income. Tax preparers may encourage clients to invest in dubious ventures with the promise of substantial tax benefits despite the questionable legality of such shelters. These arrangements aim to artificially lower tax liabilities but are usually based on convoluted interpretations of tax laws and regulations.

Call Our Dual-Licensed Tax Lawyers & CPAs for Assistance with Your Case

Seek help from our Dual-Licensed Tax Lawyers & CPAs by calling the Tax Law Offices of David W. Klasing at (800) 681-1295 or scheduling a reduced rate initial consultation online here to fix the noncompliance without facing criminal tax prosecution.

If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.

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 disclosure before 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 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, Kovel CPAs, 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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