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San Diego Area Return Preparer Pleads Guilty to ID Theft and Admits to Over 4000 False Returns

A Miramar return preparer pleaded guilty on December 2, 2015, in the San Diego Federal District Court.  As we head into the next filing season, we can probably expect more reminders to seek competent tax professionals and to safeguard our personal identifiers.  According to the Department of Justice’s press release:

According to her plea agreement, Vega, conspired with others from at least December 2009 through April 2015 to submit thousands of false income tax returns to the IRS in order to fraudulently obtain tax refunds to which Vega, her co-conspirators, and her clients were not entitled.  In carrying out her scheme, Vega falsified her clients’ tax returns without their knowledge or consent.  As part of the conspiracy, Vega claimed thousands of dollars in false education expenses and tax credits for which her clients were not qualified.

Vega told her co-conspirators and employees that they should maximize clients’ refunds by filing for a $4,000 education credit, even though the client did not attend school for that tax year. To conceal her role in the fraud, Vega intentionally omitted her name and tax return preparer identification number on the false tax returns she prepared for her clients. In total, Vega’s fraud caused the IRS to pay more than $7 million in artificially-inflated tax refunds based solely on the false education credits. Moreover, Vega admitted that she and her co-conspirators stole the identities of other persons, including minors, and used them on the false tax returns in order to further inflate the amount of the tax refund paid by the IRS.  

Vega did not shy away from personally profiting from her fraudulent scheme.  In addition to charging her clients between $150 and $200 per return, Vega also admitted that she stole more than $300,000 in false tax refunds from her clients by directing their refunds into bank accounts that she controlled.  Vega spent this money for her own personal benefit.  Vega also admitted that she evaded her own income taxes and filed false personal tax returns in which she fraudulently claimed withholding credits, education credits, and tax credits for minor dependents that she did not support and were not related to her. According to court documents, Vega evaded more than $156,000 in taxes due to the IRS for tax years 2009 through 2013. 

As part of her plea agreement, as has become commonplace in plea agreements for return preparers, Vega agreed that she would consent to a lifetime permanent injunction from the preparation of returns.  Her sentencing is set for March, where my experience tells me the prosecutors are likely to seek a multi-year sentence due to the presence of identity theft, an alleged role as the ringleader of a conspiracy, and the alleged violation of her terms of release due to additional false returns filed in 2015, after indictment.

Daniel Layton, the author of this post, is the principal of Tax Attorney OC.

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