Unscrupulous Income Tax Return Preparers Beware!

As the tax deadline approaches, the importance of choosing a reputable return preparer cannot be overemphasized

The April 15th tax filing deadline is quickly approaching and taxpayers have filed their tax returns, are in the process of preparing their own returns or will soon be visiting their tax preparation professional, whether it be a tax preparation service or a CPA.   While most tax return preparers are professional and competent and they prepare and file honest and accurate returns for their clients, there are dishonest tax return preparers who may not only be cheating Uncle Sam, but their clients as well.  They may skim a portion of the client's refund without his or her knowledge or charge inflated fees for their services.  Some may try to attract new clients by promising refunds that are too good to be true.  They may inflate a client’s deductions or fabricate them in order to get the client a higher refund, potentially exposing the client to interest and penalties when the falsifications are uncovered.  The importance of choosing a tax return professional carefully, like choosing any other kind of professional (doctor, lawyer, etc.), cannot be overstated.

IRS-Criminal Investigation (IRS-CI) is the law enforcement arm of the Internal Revenue Service and its Special Agents are responsible for investigating allegations of fraud committed by tax return preparers.  IRS-CI has a well-established “Return Preparer Preparer Program.”  Investigations in this program area involve the orchestrated preparation and filing of false income tax returns, in either paper or electronic form, by dishonest preparers who may claim: inflated personal or business expenses, false deductions, excessive exemptions, and/or unallowable tax credits.  The preparers’ clients may or may not have knowledge of the falsity of the returns.  Special Agents of IRS-CI’s New York Field Office are responsible for such investigations throughout New York State.

Besides investigating unscrupulous tax return preparers, New York Field Office Special Agents are responsible for investigating alleged criminal violations of other Internal Revenue Service laws and related federal offenses in all of New York State.  

A review of court records of cases sentenced in the U.S. District Courts in New York State demonstrates the variety of investigations worked by the New York Field Office, both as a lead investigative agency and in cooperation with other law enforcement agencies:

·         On October 22, 2013, Samuel Ashkenazi was sentenced to 50 months in prison for conspiracy to commit money laundering, conspiring to launder the proceeds of health care fraud and conspiracy to commit money laundering in relation to health care fraud.  He forfeited $347,230.17.

  ·         On December 5, 2013, Daniel Baddouch was sentenced to 27 months in prison for conspiracy to commit bank fraud.

  ·         On February 6, 2014, Ahmed Fahmy was sentenced to 5 years of probation, including 6 months of home detention with electronic monitoring, for subscribing to a false tax return.  He was ordered to make restitution of $69,503.

  ·         On December 16, 2013, Vincent Ferrante was sentenced to 3 years of probation, subject to electronic monitoring, for making a false statement on a tax return.  He was fined $40,000.

  ·         On November 20, 2013, David Gambino was sentenced to 188 months in prison for engaging in a continuing criminal enterprise and conspiracy to launder monetary instruments.

  ·         On November 20, 2013, Isaac Gindi was sentenced to 27 months in prison for conspiracy to commit bank fraud.  He was fined $6,000.

  ·         On November 26, 2013, Peter Gromacki was sentenced to 3 months in prison for conspiracy to violate the international emergency economic powers act, violating the international emergency economic powers act and making false statements.  He was fined $5,000.

  ·         On January 7, 2014, Ronald Hinderhofer was sentenced to 4 years of probation, including 6 months of home detention with electronic monitoring, for willful failure to collect and pay over tax.  He was ordered to serve 350 hours of community service and make restitution of $573,290.95.

  ·         On November 22, 2013, Mohammad Idris was sentenced to 5 years of probation, including 6 months of home confinement with electronic monitoring, for tax evasion.  He was ordered to serve 300 hours of community service and make restitution of $577,399.

  ·         On November 4, 2013, Achileas Karolidis was sentenced to 3 years of probation for failing to file a corporate tax return.

  ·         On February 14, 2014, Kyong Hun Kim was sentenced to 3 years of probation.  He was fined $10,000 and ordered to serve 100 hours of community service.

  ·         On February 11, 2013, Young Muk Kong was sentenced to 2 months in prison, to be followed by 1 year of supervised release, including 6 months of home detention with electronic monitoring, for making false statements on corporate tax returns.

  ·         On December 10, 2013, Gregory Kovar was sentenced to 109 months in prison for conspiracy to distribute and possess with intent to distribute a controlled substance and money laundering.

  ·         On December 20, 2013 Biagio Vigliotti was sentenced to 90 days in prison, to be followed by 6 months of home detention with electronic monitoring, for conspiracy to commit mail and wire fraud and willful failure to collect and pay over taxes.  He was ordered to serve 150 hours of community service and make restitution of $224,243.