The IRS Dirty Dozen 2016, #4: Return Preparer Fraud

Return Preparer Fraud returns this year to the IRS Dirty Dozen list of scams to watch out for this tax season. Last year, we listed the various ways of identifying unscrupulous tax return preparers. This year, we would like to focus on an interesting case and the severe penalties associated with this kind of tax abuse. 

San Diego tax preparer continues filing fake returns while out on bond

This past December, the Department of Justice reported that a North San Diego County tax preparer pled guilty to filing more than 4,000 fraudulent tax returns and obtaining over $7 million in false refunds for herself and her clients. 

From 2009 through 2015, Melissa Ann (“Lisa”) Vega instructed the staff of L&T Works, her tax preparation business, to deduct false education expenses and claim a $4,000 education credit on client tax returns – even for clients who did not attend school that year and were not qualified. The falsifications were apparently made without the clients’ knowledge and Vega’s name did not appear on any of the tax returns. She was, however, listed as owner of the tattoo shop next door. 

Vega redirected over $300,000 in false refunds for her clients into bank accounts that she controlled, and evaded more than $156,000 of her own tax obligations. She is a felon with prior convictions for grand theft and ID theft.

One local news source reported last April that within days of posting bond, Vega was back at work, filing over 380 more fraudulent returns. 

Vega and her co-conspirators at L&T Works have all entered guilty pleas and are awaiting sentencing.

Penalties for Return Preparer Fraud

Vega pled guilty to the following crimes:

  • Conspiracy to defraud the Government with respect to claims under 18 U.S. Code 286, which carries penalties of up to 10 years’ imprisonment and a maximum $250,000 fine.
  • Attempt to evade or defeat tax under 26 U.S. Code 7201, for which she faces five years’ imprisonment and a maximum $250,000 fine.
  • Aggravated identity theft under 18 U.S. Code 1028A, which is punishable by a mandatory two years in prison, to be served consecutively with other terms of imprisonment and a fine (in this case up to $250,000).

Vega also faces a civil complaint, and a permanent injunction bars her from filing tax returns for anyone but herself in the future. She was also ordered by the court to surrender a variety of unregistered firearms and a sawed-off shotgun. 

Top notch tax lawyers and accountants in San Francisco, California

The law firm of Moskowitz, LLP includes a highly experienced staff of tax attorneys and CPAs. We handle the full range of criminal tax defense and civil tax issues.

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