Underhanded underground; down on the farm; reality check; and other highlights of recent tax cases.
Augusta, Georgia: Two ghost preparers have pleaded guilty to a tax scheme.
Kim Brown, 40, pleaded guilty to preparing and filing false 1040s for clients. She operated a ghost tax prep business out of her residence and fabricated income to qualify her clients for tax credits, claimed fake deductions to inflate refunds and charged clients a percentage of the refund. Brown did not provide her clients with a copy of the returns she prepared, nor did she review the returns with clients before e-filing to the IRS.
Kim Brown and another individual ghost preparer prepared 22 false returns that caused the Treasury to issue $541,912 in false refunds.
Allen Brown, 41, separately pleaded guilty to wire fraud. In 2022 and 2023, he and others operated a ghost prep business in three Augusta locations, including a church and Brown’s residence. He fabricated income to qualify his clients for credits, claimed fake deductions to inflate refunds and charged clients a percentage fee of the refund. Brown also did not provide his clients with a copy of the returns and didn’t review the returns with clients before e-filing them with the IRS.
The scheme entailed offering clients two filing options: “Standard” or “I’m Not Scared.” The former generally resulted in a fraudulent refund of $2,000 to $9,000, the latter in a bogus refund of $14,000 to $30,000. For the “I’m Not Scared” option, Brown had his preparers falsely claim fuel tax credits and falsely report gross income and other expenses on Schedules C and medical and dental expenses on Schedules A. For the “Standard” option, Brown had his preparers falsely claim sick and family leave credits and other false items. Brown had clients pay him a 10% fee of each refund.
Brown and other ghost preparers who worked with him falsified 63 federal income tax returns for clients, causing the Treasury to issue $1,003,631 in false tax refunds.
He faces up to 20 years in prison, a period of supervised release, restitution and monetary penalties.
Lexington, Kentucky: Business owner Matthew Buresh has been sentenced to two years in prison for two counts of failure to pay taxes.
Buresh owned and operated CR Cable Construction, which installed underground utility lines. Between March 2018 and December 2022, Buresh did not pay federal employment taxes withheld from employees’ paychecks. He was notified of employment taxes due, accounted for such taxes, had sufficient funds to pay them but chose not to pay. Between 2017 and 2022, Buresh withdrew $2.9 million in cash from CR’s bank account to pay business expenses, his wages and his distributions.
Buresh will also be under the supervision of the U.S. Probation Office for three years after his prison term and must pay $805,787.82 in restitution.
Hollywood, California: Kevin J. Gregory, who previously admitted to seeking more than $65 million from the IRS by falsely claiming that his non-existent farming business was entitled to pandemic-related credits, has been sentenced to 57 months in prison.
From November 2020 to April 2022, Gregory made false claims to the IRS for the payment of nearly $65.3 million in refunds for the purported farming-and-transportation company Elijah USA Farm Holdings. Gregory knew that Elijah Farm employed nobody and paid wages to no one and had not made federal tax deposits to the IRS in the amounts stated on his return.
The IRS issued a portion of the refunds, and he spent more than $2.7 million on personal expenses.
He was also ordered to pay $2,769,173 in restitution.
Dolton, Illinois: Tax preparer Byron Taylor, of Homewood, Illinois, has pleaded guilty to preparing and filing false individual income tax returns for clients and for himself.
He owned and operated We Are Taxes and boasted that “Everyone Gets a Check!” For many years, Taylor prepared and filed false federal individual income tax returns for clients that included such false deductions as medical and dental expenses, gifts to charity, state and local real estate taxes and unreimbursed employee expenses, as well as false business losses.
For 2015 through 2020, he prepared and filed at least 54 false returns for clients.
Taylor also filed or tried to file false individual income tax returns for himself for 2017 through 2021, underreporting income from We Are Taxes or failing to report the business entirely.
Taylor also filed multiple Paycheck Protection Program loan applications for several businesses he claimed he owned and operated, claiming that these entities had earned certain amounts of gross income and that such income had been reported to the IRS. Neither was true, but four of the applications were approved. Taylor spent some of the money on personal expenditures, including gambling expenses.
He caused a total tax loss to the IRS of $914,745.
Sentencing is Nov. 4. He faces a maximum of three years in prison for the false return he prepared and filed for a client and up to three years for the false return he filed for himself. Taylor also faces a period of supervised release, restitution and monetary penalties.
Mobile, Alabama: Tax preparer Kenneshia Davis has been sentenced to a year and a day in prison for filing fraudulent returns.
She operated Davis Tax Service with her cousin, Brandy Lynn Davis, at three locations in Mobile. IRS records show that Davis underreported her income by more than $2 million between 2015 and 2017.
She was also ordered to pay $67,975 in restitution and to serve a year of supervised release. Brandy Lynn Davis, who has pleaded guilty to filing fraudulent returns, was scheduled to be sentenced on July 10.
Jacksonville, Florida: Ana Juanita Andrade-Reyes, a Honduran national illegally in the U.S., has been sentenced to 37 months in prison in connection with her conviction for three counts of conspiracy to commit wire fraud and two counts of conspiracy to commit tax fraud.
Andrade-Reyes established a shell company that purported to be in the construction industry. She obtained a workers’ comp policy in the name of the shell company to cover a minimal payroll for a few purported employees, then “rented” the insurance to work crews who had obtained subcontracts with construction contractors on projects in Florida, as well as to contractors in other states.
As part of the scheme, the contractors issued payroll checks for the workers’ wages to the shell companies. Andrade-Reyes cashed these checks, then distributed the cash to the work crews without withholding payroll taxes. She also deducted a fee, typically some 6% of the payroll. During the scheme, Andrade-Reyes cashed payroll checks totaling approximately $8 million.
Neither the shell company nor the contractors reported to government authorities the wages paid to the workers, nor did the company and contractors pay the employees’ or the employer’s portion of payroll taxes. According to the IRS, the payroll taxes due on the wages totaled $2,048,182.
She was also ordered to pay $2,084,182 in restitution to the IRS, and the court entered a money judgment against her for $664,588.
Birmingham, Alabama: Tax preparer Geta Barr has been sentenced to 18 months in prison for preparing false returns for clients.
Barr, who pleaded guilty in February, owned the tax prep business Maxi Tax Resource. Of some 900 returns that Barr prepared for 2017 to 2019, almost all claimed refunds.
She prepared false returns for at least 14 clients between 2016 and 2020, including false Schedule C losses for fabricated businesses, as well as false itemized deductions and standard deductions.
Her conduct cost the IRS more than $300,000.
