On April 18, 2018, Ana Bajo, a California resident, pleaded guilty in the Northern District of California to conspiring to file fraudulent claims for more than $9.7 million in refunds by obtaining the personal information of others and filing more than 2,300 fraudulent income tax returns with her co-conspirators. The Internal Revenue Service (IRS) paid over more than $7.5 million as a result of the scheme. Bajo now faces a maximum of ten years in prison, plus supervised release, restitution, and monetary penalties. Her sentencing is scheduled for September 26, 2018.
On March 5, 2018, a former Internal Revenue Service (IRS) employee, Pamela Pringle, was sentenced in the Eastern District of California for "making opportunities for persons to defraud the United States and for making and subscribing false returns." While employed by the IRS, Pringle prepared and filed income tax returns for other individuals that included false deductions, and in several years she also filed fraudulent tax returns for herself, claiming deductions to which she was not entitled. Pringle entered a guilty plea in November 2017 and will spend 5 months in prison, then 36 months under supervised release, including 5 months of home confinement; she was also ordered to pay $56,857 in restitution.
The Department of Justice has permanently barred a Southern California tax preparer from preparing federal returns for others, following a complaint filed by the government that the tax professional had been filing returns claiming a total of more than $9 million in fraudulent refunds since at least 2009. She agreed to the injunction and pleaded guilty to conspiracy to file false, fictitious, and fraudulent claims, tax evasion, and aggravated identity theft.
The Internal Revenue Service (IRS) recently released its top-12 list of tax scams to watch for in the current tax year, an annual list called the "Dirty Dozen." Topping the list in 2018 are the perennial telephone and phishing scams, identity theft, and return preparer fraud. Also included are acts such as falsely padding deductions, making improper claims for business credits, and falsifying income. For the complete list and information from the IRS on how to protect yourself from tax scams, click here.
The Internal Revenue Service (IRS) kicked off its annual "Dirty Dozen" awareness campaign about common tax scams for 2018 with a reminder that phishing schemes are still a serious threat to personal information safety, and are evolving. The most recent variation on phishing (previously described here) involves an unexpected deposit into the bank account of a target. Criminals are filing fraudulent tax returns, and directing refunds to be deposited into real bank accounts of victims. The criminals then call the victim who received the deposit and demand the return of the funds as erroneous.
The California Tax Education Council (CTEC) began a public awareness campaign for the 2018 tax filing season targeting "ghost tax preparers," meaning paid tax professionals who do not sign the returns they prepare. The Council reminds taxpayers that "tax preparers who charge a fee to do your taxes, but never sign your tax return are breaking the law." Hiring a ghost preparer could lead to tax refund fraud, penalties, or additional taxes. For more information from CTEC on this issue, click here.
The Internal Revenue Service (IRS) recently released the fiscal year 2017 annual report for its Criminal Investigation Division (CI). During FY 2017, CI initiated over 3,000 cases concerning Title 18 and Title 31 crimes, with 72.5% of its investigation time spent on tax matters such as refund fraud, identity theft, abusive tax schemes, and cyber crimes. Its investigations identified $2.5 billion in funds related to tax fraud, and the division had a 91.5% overall conviction rate.
Susanne D. Rüegg Meier, a citizen and resident of Switzerland, pleaded guilty on July 19, 2017, to conspiring with U.S. taxpayers and other Swiss bankers to defraud the United States as the head of a team of bankers for Credit Suisse AG between 2002 and 2011. She was responsible for the accounts of over 1,000 clients and handled approximately $400 million in assets. Her conduct led to an estimated U.S. tax loss of between $3.5 and $9.5 million. Sentencing in this case is scheduled for early September 2017; Rüegg Meier faces a maximum of five years in prison, a period of supervised release, and restitution penalties.
The IRS has begun releasing detailed notices on the top 12 most common tax scams taxpayers may encounter during the 2017 filing season. Included so far are:
The IRS Security Summit issued a warning to tax professionals about a new e-mail scam by cybercriminals posing as potential clients. Scammers are sending phishing e-mails in two parts, beginning with a standard solicitation for services followed by a second email with an embedded web address or PDF attachment with an embedded web address. When the tax professional thinks they are accessing a new client's tax information, in reality they are opening up their system for the scammer to collect personal information for illegitimate use.