With filing season in full swing, the IRS is hard at work rooting out dishonest tax preparation.  Although much attention is given to the problem of dishonest tax preparation during filing season, it is actually a problem that occurs throughout the year.  IRS Criminal Investigators investigate this fraud well after false tax returns have been prepared and filed.  The following are just some of the recent cases in which dishonest tax preparers found themselves on the other side of the law.

On Friday, January 15th, Kertena Seabrook was found guilty on 20 counts of aiding and assisting in the preparation of false tax returns.  The trial before Judge Sterling Johnson in the Brooklyn Federal Courthouse lasted five days and took the jury less than a day to find Seabrook guilty.  Seabrook operated a tax preparation business, Future Star Digatech, at 713 Monroe Street, Brooklyn.

According to court records, in 2006, the IRS Brookhaven Service Center identified hundreds of suspicious tax returns that were filed between 2003 and 2005. The returns named Seabrook as the preparer.  Further review of the returns revealed false or overstated deductions for medical and dental expenses, charitable contributions, and non-reimbursed work expenses.  The Brookhaven Service Center determined that tax returns had a refund rate of at least 97%. Notably, the national average for refund rates is approximately 37%.  In one instance, Seabrook recorded $2,407 in medical expenses, $4,586 in charitable contributions, and $26,525 in job-related expenses for a client that had gross earning of only $42,669.

Soon after the Brookhaven Service Center detected the suspicious tax returns, in April 2007, the defendant was interviewed at her office by IRS Special Agents. During the interview, the defendant denied inflating or fabricating any claimed deductions in her clients’ returns.  The defendant stated to the effect that if a client did not have proper documentation, she would not claim a deduction on the relevant tax return.  In February 2009, a grand jury in the Eastern District of New York returned an indictment charging the defendant with 43 counts of aiding and assisting the preparation of false tax returns, a felony. Each count carries a maximum sentence of 3 years and a $100,000 fine.  After starting the criminal investigation, many of the taxpayer witnesses began to receive audit inquiries from the IRS.  The IRS initiated a formal audit of all tax returns prepared and filed by the defendant from 2004 to the present. The audit reviewed 1,802 tax returns prepared and filed by the defendant for the tax years 2004 through 2008. 

The IRS is focused on rooting out dishonest tax preparation. Since October 2009, three other defendants involved in tax preparation were sentenced.  During 2001-2003, Emanuele Giuseppe, a Bronx tax preparer, paid approximately $200 for stolen names and social security numbers to claim deductions on client's tax returns in order to falsely claim the Earned Income Credit and Child Care Tax Credits.  At least $101,964 was stolen.  In an unrelated case, during 2003, Bernardo Aponte, of White Plains Road, Bronx, N.Y., used stolen id's and prepared 17 false tax returns and sent them to addresses he had access, stealing $31,165 from the US Treasury.  He was ordered to pay back $51,098 to the IRS.  Both Giuseppe and Aponte were sentenced to six months incarceration.  Christos Antonakas, prepared taxes for Apollo Tax Services, Manhattan, New York, during 2000-2005.  As an employee, he conspired with the owner to prepare false tax returns by falsely inflating itemized deductions.  He received two years probation and was ordered to pay back $102,859.

IRS Criminal Investigation Spokesperson Joseph Foy stated, "The vast majority of tax preparers are honest and do a good job.  Unfortunately, the few dishonest tax preparers tarnish the reputation of the profession and hurt law abiding citizens who are trying to comply with the law."