Credits galore; boost boast; and other highlights of recent tax cases.
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Franklin, Wisconsin: Tax preparer Jahnell Easly, 29, has pleaded guilty to a count of aiding in the preparation of false returns.
Easly prepared and filed federal returns for clients for a fee. For the 2020, 2021 and 2022 tax years, she e-filed some 424 returns with the IRS; of those, some 386 contained indicators and evidence of fraud.
Most of the 1040s filed by Easly on behalf of her clients reported materially false income related to business income and losses, household employee wages or ordinary dividends. They also reported a variety of materially false refundable credits and other payments including sick and family leave credits, child and dependent care credits, fuel tax credits, IRC Section 1341 credits or false income withholdings.
Her clients received large refunds to which they were not entitled, which increased Easly’s commission well beyond what she was entitled to receive. Throughout the course of her scheme, Easly intended a loss to the IRS of approximately $3,499,253, and caused an actual tax loss, based on fraudulent refunds paid, of $1,397,947. She also obtained some $253,712.89 in fees and commissions to which she wasn’t entitled.
Easly faces up to three years in prison and a fine of up to $250,000. Sentencing is May 21.
Jacksonville, Florida: Minister Brian Carn Jr. has pleaded guilty to obstructing IRS efforts to collect his tax debts.
Carn, dubbed in news reports a “self-styled prophet,” operated a ministry under various names, including Healing House Ministries Inc., Brian Carn Ministries Inc. and Kingdom Culture City Churches. In 2016, Carn filed his return for 2015 that properly reported that he earned more than $1.4 million in income and owed more than $600,000 in federal taxes.
He did not pay those taxes. A few months later, when the IRS attempted to collect his unpaid taxes, including by placing liens on his properties and attempting to levy his bank accounts, Carn amended his 2015 return and falsely removed nearly $1.3 million in income that he previously reported. To accomplish this, Carn hired a new accountant and provided him with a fictitious, backdated employment agreement that provided for an annual salary of $120,000 and an annual parsonage allowance of $24,000.
Carn told his accountant that this was all the income he earned for the year. Carn listed third parties on credit applications, financial account openings and lease applications otherwise, and knew that the income he earned far exceeded the purported salary in the employment agreement provided to the new accountant.
In the following years, operating under the premise of the fictitious employment agreement, Carn filed a series of other returns that drastically underreported his true income. In 2020, he stopped filing returns despite continuing to earn income by using ministry funds to pay personal expenses.
Finally, when the IRS was trying to collect the outstanding taxes, Carn made false representations and material omissions to the IRS to conceal his assets and income.
Carn’s obstruction caused a loss to the U.S. of $550,000 to $1.5. He faces a maximum of three years in prison.
Milwaukee: Tax preparer Cameron Summers has pleaded guilty to two counts of aiding and assisting in the preparation of false tax returns.
Summers worked at a tax prep business beginning in 2018. From 2020 through 2022, he filed more than 400 individual federal income tax returns for clients, using his name, PTIN and business name.
He repeatedly used false items on clients’ returns to inflate refunds, including false business expenses, sick and family leave credits, fuel credits and educational tax credits. Summers made notations stating that he had “boosted” the refund amount on some returns and told the IRS that he did everything he could to get a big refund, such as using whatever numbers were available and maximizing credits on the returns.
The loss to the IRS totaled more than $1.1 million.
Sentencing is May 5. Summers faces up to three years in prison and up to a $250,000 fine on each count, as well as a term of supervised release after imprisonment.
