“Tax Time” Preparer Fraud Case Goes to Trial

People trust their tax preparer to handle their taxes diligently and accurately. Handling taxes for a client requires the preparer to exercise his or her experience, savvy, and knowledge of the tax code to satisfy all obligations held by the individual. While tax preparers should attempt to minimize the amount of tax paid, their foremost obligation is to ensure that the taxpayer is compliant with all tax payment and tax disclosure obligations. While it is true that tax preparers are human and mistakes can sometimes occur, allegations of organized and intentional fraud are truly shocking.

And yet, each and every year, tax preparers are charged and convicted of committing tax crimes on behalf of or without their clients’ knowledge. In many cases, these charges stem from the fact that the preparer promises huge refunds or the largest refund in town without ever looking at the individual’s finances or taxes. The preparer then fraudulently claims credits or deductions to deliver on these promises. Unfortunately, alleged fraud of this type is generally repeated time and time again for multiple clients. This can create tax problems not only for the tax preparer but also for the individual taxpayers.

From 58-Count Indictment to Trial for Alleged Tax Fraud

The legal problems and troubles for Ken Wilford Degourville Jr. and Lakeisha Nichole Degourville began in November 2014 after their business Tax Time was raided due to suspicion of fraudulent tax filings on behalf of clients. At the time, authorities accused the pair of filing false tax returns for approximately 2,000 clients. While the alleged methods utilized to obtain fraudulent refunds differed across clients, the pair were generally accused of fabricating expenses, deductions, and tax credits through claims stemming from non-existent businesses or educational endeavors. In one instance, the tax return for an employee of an engineering firm claimed $768 in advertising costs, $5,240 in truck expenses and $12,962 in business losses, plus office expenses and insurance for a non-existent mechanic shop the return claimed that he owned. Unfortunately, the individual.

The pair were originally eachcharged under a 58-count indictment. Since that time, the charges against the couple have been reduced and they were recently re-indicted. The new indictment includes 19 counts against Ken Degourville and 14 counts against Lakeisha Degourville. Ken Degourville faces seven counts of filing false documents while Lakeisha Degourville faces six counts of the same. They also face multiple electronic forgery charges. They each face a single count of tax evasion and theft. The tax evasion charges stem from the allegations that the couple collected over $550,000 is preparation fees in 2013 but failed to file an income tax return.

One item of note – and one that should concern taxpayers – is that the tax preparers’ defenses centered on the fact that the taxpayers were just as guilty as or more guilty than the preparers because they were the ones who realized a financial benefit. Unfortunately, tactics where an accused tax preparer attempts to shift blame onto the clients is far from uncommon.

Accuracy Remains the Responsibility of the Tax Payer

While the tax preparers are the ones currently facing charges, the taxpayer also faces a mess. Technically, a taxpayer certifies the accuracy of the contents of a tax return under the penalty of perjury. Thus, the taxpayer remains responsible and liable for inaccuracies and mistakes contained within the tax return. Thus, the taxpayer himself or herself could face tax charges if the information appears to be willfully false.

Aside from opening oneself up to potential criminal liability for the false tax return, the taxpayer will face consequences even in the absence of formal charges. When the IRS or state tax agency becomes aware of the false deductions, fabricated credits, mischaracterization of income, and other inaccuracies and issues then the taxpayer will be forced to fix the return. He or she may have to pay back a refund or payadditional tax to the IRS or state tax agency. The taxpayer may be liable for additional fines or penalties due to the botched filing. Furthermore, the taxpayer will incur the costs of hiring a new tax preparer or CPA to identify and correct the errors made in the original filing.

Facing Tax Issues Due to the Actions of a Preparer?

If you have come to suspect that a tax preparer may have played fast and loose with your taxes, you should seek a second opinion and handle any potential issues before the tax preparer attempts to blame you for their actions or otherwise implicate you in potential tax crimes. The tax attorneys and CPAs of the Tax Law Offices of David W. Klasing can get ahead of potential issues and assist you in addressing these tax challenges strategically. To schedule a reduced-rate consultation, call 800-681-1295 today or contact us online.