UNION — A tax preparer was arrested Friday morning at her Union home for allegedly teaming up with her tax preparer husband to get unearned tax refunds for their clients to make extra money for themselves, U.S. Attorney Paul J. Fishman announced.
Special agents of IRS-Criminal Investigation (IRS-CI) arrested Carol Johnson, 42, on an indictment charging her and her husband, Courtney Johnson, 43, each with one count of conspiracy to defraud the United States and six counts of assisting in the preparation of fraudulent tax returns. Courtney Johnson remains at large. The pair operated tax preparation businesses in South Orange and Jersey City, through which they allegedly committed crimes resulting in tax losses of nearly $400,000.
According to the indictment unsealed June 21, from tax years 2005 through 2007, the Johnsons allegedly sought to generate increased referrals, enhance their business and enrich themselves by preparing and filing income tax returns that were based on false information for the purpose of generating tax refunds.
To do this, the Johnsons are accused of routinely using a number of fraudulent practices, including falsely claiming a filer was a “head of household”; inventing and inflating deductions; creating fictitious businesses with bogus incomes and losses; and creating false credits for education, childcare and moving expenses.
Although taxpayers generally met with one of the defendants to provide information to prepare their tax returns, it was routinely the other defendant whose name appeared as preparer of the return, according to the indictment.
On several occasions, the defendants allegedly stole part of the refunds by issuing Santa Barbara Bank cashier’s checks payable to their clients, forging the client’s signatures and depositing the checks into a bank account they controlled.
On at least one occasion, the Johnsons allegedly filed two federal income tax returns for the same year for the same client, providing a copy of the return with a several-hundred-dollar refund to the taxpayer and a copy with a several-thousand-dollar refund to the IRS.
The bogus returns resulted in a tax loss of nearly $400,000.
The conspiracy charge carries a maximum potential penalty of five years in prison. Each false tax return count carries a maximum potential penalty of three years in prison and a $250,000 fine.
Fishman credited special agents of IRS-CI, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the investigation.
The charges and allegations contained in the indictment are merely accusations and the defendants are considered innocent unless and until proven guilty.
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