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As the tax season comes upon us, the IRS is urging taxpayers to be careful when choosing a tax preparer. We are reminded of this by a recent court case involving a Washington, D.C. tax preparer who was found guilty of preparing and filing false tax returns both for her clients and for herself. The DOJ press release is below:

Tax Preparation Business Owner and Son Convicted of Conspiring to Defraud the United States and Preparing False Tax Returns



Thursday, January 29, 2015

A Washington, D.C., tax return preparer and former Washington, D.C., public school teacher and her son, a current Washington, D.C., public school teacher, were convicted today by a federal jury of conspiracy and preparing and filing false tax returns, the Justice Department and the Internal Revenue Service (IRS) announced.

According to the evidence presented at trial, Sherri Davis, 42, of Washington, D.C., was the owner and operator of 2FT Fast Facts Tax Service, a tax return preparation business operating in Washington, D.C., from 2003 to 2012.  In 2012, Sherri Davis changed the business name to Davis Financial Services and her son, Andre Davis, 24, was listed as the owner and operator of the business.

Sherri and Andre Davis were each convicted on one count of conspiracy to defraud the United States.  Sherri Davis was also convicted of 25 counts of aiding and assisting in the preparation and filing of false federal income tax returns and three counts of filing false personal income tax returns.  Andre Davis, a Washington, D.C., resident, was also convicted of one count of aiding and assisting in the preparation and filing of false tax returns.

“As we enter the 2015 filing season, tax return preparers should take note of today’s conviction,” said Principal Deputy Assistant Attorney General Caroline D. Ciraolo for the Department of Justice’s Tax Division.  “The Department of Justice’s Tax Division, working with IRS-Criminal Investigation, the Offices of the U.S. Attorneys and other local, state and federal law enforcement partners, will identify, investigate and prosecute to the fullest extent of the law those individuals who willfully participate in the preparation and filing of false returns.  These individuals are a threat to the integrity of the tax system, and will face felony charges, incarceration and substantial economic sanctions.”

At trial, the evidence established that Sherri and Andre Davis prepared and filed false tax returns for clients that included various false and fraudulent schedules, deductions, expenses and credits with the goal of reducing the amount of taxes owed by the taxpayers and obtaining larger refunds for the taxpayers than they were entitled to receive.  In some instances, Sherri and Andre Davis and those working for them attached to the false tax returns false and fraudulent Schedules C that reported false business losses and false Schedules A that reported fraudulent itemized deductions.  On some returns, the Schedule C business claimed on the return was completely fabricated.  On other returns, the Schedule A included false or grossly inflated gifts to charity, job expenses and other miscellaneous expenses.

The evidence at trial further established that for calendar years 2007 through 2009, Sherri Davis filed her own false income tax returns in which she failed to report more than $300,000 in tax preparation fees that she received from her business.

“Intentionally preparing false tax returns is a criminal offense that reflects badly on the entire industry,” said Special Agent in Charge Thomas J. Kelly of IRS-Criminal Investigation’s Washington, D.C., Field Office.  “As Sherri and Andre Davis found out today, it is not a good idea to file false tax returns and expect the IRS not to investigate and recommend prosecution.  IRS-Criminal Investigation is committed to holding individuals accountable for their criminal actions.”

Sherri and Andre Davis will be sentenced on April 29 in the U.S. District Court for the District of Columbia by U.S. District Judge Thomas Hogan.  The conspiracy conviction has a statutory maximum sentence of five years in prison and a $250,000 fine.  Each of the remaining counts of conviction has a statutory maximum sentence of three years in prison and fine of $250,000.

Principal Deputy Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation and the D.C. Office of Tax and Revenue Criminal Investigation Division, who investigated the case, as well as Trial Attorneys Jessica Moran, Tiwana Fleming and Mark McDonald for the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office for the District of Columbia for their substantial assistance.

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