A local return preparer has pleaded guilty to preparing returns claiming over a million dollars in false refunds. In the height of tax season, this operates as a strong reminder to be cautious when choosing your return preparer. Per the DOJ press release, which can be found at this link:
LOS ANGELES – A Fullerton return preparer has pleaded guilty in a scheme to defraud the Internal Revenue Service through the filing of bogus returns claiming tax refunds.
Michael Raymond Martinez, 48, of Fullerton, pleaded guilty yesterday afternoon before United States District Judge Beverly Reid O’Connell to one count of aiding and assisting in the preparation and presentation of a false tax return.
Martinez, who often met with clients at their homes or at neutral locations, operated under the names Your Home Tax Service, Great Tax Services and Great Tax Solutions. According to a plea agreement filed in this case, from at least the beginning of 2009 until April 2015, Martinez prepared and filed with the IRS at least 245 false federal income tax returns that resulted in tax losses to the United States of approximately $1,155,006.
“This defendant falsely claimed to be a certified public account and a former IRS agent to gain credibility with clients and potential clients,” said United States Attorney Eileen M. Decker. “He typically met with his clients at locations other than his office, the meetings typically lasted for only a few minutes, and he ‘guaranteed’ large refunds. All of these factors are red flags that taxpayers should heed when choosing a tax preparer.”
During his brief meetings with clients, Martinez received clients’ income documents, taxpayer questionnaires, and documents pertaining to interest and expenses. Martinez also took payment during these meetings. Martinez typically prepared and electronically filed the tax returns, but he would not review the returns with his clients.
“To build faith in our nation’s tax system, honest return preparers need to be assured that dishonest preparers will be held accountable,” stated IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. “IRS Criminal Investigation, together with the Department of Justice, will continue to investigate and prosecute those who violate our tax system.”
In addition to the 245 fraudulent tax returns filed for clients, Martinez failed to report taxable income from his tax preparation business for the tax years 2011 and 2012 in the amounts of $162,479 and $111,000, respectively. The failure to report income for these two years created an additional loss to the government for 2011 and 2012 of $52,884 and $33,842, respectively.
Martinez faces a statutory maximum sentence of three years in federal prison when he is sentenced by Judge O’Connell on May 15. Martinez may also be ordered to pay restitution.
Return preparer fraud is one of the Internal Revenue Service’s Dirty Dozen Tax Scams for 2016. The IRS has some tips on their website for choosing a tax preparer, and has launched a free directory of federal tax preparers.
This case is the product of an investigation by IRS Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Paul Rochmes of the Tax Division.
Paul Rochmes is one of the most accomplished and respected prosecutors (and former defense attorneys) in California. I worked with him as in my time as a tax prosecutor in the United States Attorney’s Office, so it is no surprise to see him associated with a result like this from a well-developed case.
–Daniel W. Layton, the author of this post, is a former IRS trial attorney and former Federal prosecutor who was tasked with handling criminal tax prosecutions and civil litigation including tax refund suits, lien enforcement and foreclosures. As a tax attorney in private practice in Newport Beach, he uses his knowledge of IRS procedures and rules to keep the IRS in check and protect his clients’ rights. He may be contacted at (949) 301-9829.