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October 1, 2023

Accountants Behaving Badly: Too Many Pints, Fraudster Gets 18 Months In Jail, Egypt Tax Authority Chief Arrested

Plus, a couple of tax preparers thought they could get away with defrauding the IRS. They were wrong.

Drunk trainee accountant crashed car after Leeds night out [The Yorkshire Post]
Archie Scott was banned from driving for 20 months and was sentenced to 12 months of community order with 50 hours unpaid work after he crashed into two parked cars while driving home drunk in early December.

Paramedics called police after spotting Scott, 21, urinating in a street in Pudsey before getting behind the wheel of a Ford Fiesta, authorities said. He was found to be double the legal limit for drink driving.

Scott had parked his car on a street near Bramley rail station before catching a train to work in Leeds on Dec. 5. After work, he drank up to seven pints after going out with friends in Leeds city centre. He then took a taxi to where his car was parked.

Belfast accountant Michael Kinder jailed over £1m care home fraud [BBC]
Kinder, who defrauded Nazareth House Care Village in Belfast, Northern Ireland, over a six-year period, will have 18 months to think about his choices:

Michael Kinder, 52, from Maryville Park, south Belfast, will also serve a further two years on supervision.

Kinder pleaded guilty at Belfast Crown Court in November to transferring £1,036,055 into his own bank accounts.

The court was told in the years leading up to the fraud he had lost full-time employment and had become addicted to the prescription drug OxyContin.

Egypt arrested tax authority chief on charges of receiving bribes [Reuters]
Abdul Azim Hussein, head of Egypt’s tax authority, was arrested on charges of receiving bribes, the public prosecutors’ office said on Jan. 4.

“It was proved through recorded phone calls and meetings that he received money and gifts as bribes”, it added in a statement.

Abdul Azim Hussein

The statement gave no details but the state news agency MENA said he had received bribes from some chartered accountants who were dealing with the tax authority.

Deputy tax authority director Reda Abdul Kader was named acting head of the agency.

Inglewood-based tax preparer sentenced to over five years in federal prison for scam that sought $5.6 million in bogus tax refunds [Justice Department]
Cubby Wayne Williams, a tax preparer who formerly worked at the California Franchise Tax Board, was sentenced on Dec. 16 to 63 months in federal prison for defrauding the IRS out of millions of dollars by declaring bogus withholdings used to fraudulently claim substantial tax refunds.

Williams, 64, owner of Inglewood, CA-based tax services company Williams Financial Network, was found guilty last October of 22 counts of assisting in the preparation of false tax returns for his clients and four counts of subscribing to false tax returns for himself.

Williams filed tax returns claiming that his clients had accrued Original Issue Discount (OID) interest income. OID is a form of interest that accrues over the life of a bond or other debt instrument, but is not payable as it accrues. Financial institutions use IRS Forms 1099-OID to report this accrued, but unpaid, income and any tax withholdings on it.

Williams fraudulently claimed OID withholdings on 22 tax returns for his clients for the tax years 2013 through 2016, and sought hundreds of thousands in bogus tax refunds. Williams took a cut of many of these refunds often by directing the IRS to deposit a portion into a bank account under his control.

When his clients complained that their returns had fallen under the scrutiny of federal tax officials, resulting in money being owed to the IRS, Williams told them the IRS had made a mistake and they were still entitled to their tax refunds. When the same clients informed Williams they were being audited, he assured them he would represent them before the IRS and resolve any issues, but he ultimately did little other than to submit further fraudulent documentation to the IRS.

Between 2012 and 2019, Williams submitted 222 false client tax returns claiming approximately $5,648,809 in fabricated income tax withholdings, according to court documents.

Tax preparer admits conspiring to commit tax fraud [Justice Department]
Zenobia Williams pleaded guilty on Dec. 30 to one count of conspiring to defraud the IRS by reporting false business expenses on a New Jersey business owner’s tax return to fraudulently reduce his tax liability and by reporting those sham expenses as income on two other individuals’ tax returns to obtain unwarranted refunds for them.

Williams, 52, who owned Maplewood Business Services LLC in Maplewood, NJ, and the business owner agreed to report false labor expenses for his business on his personal tax return for calendar year 2015 to decrease his tax liability.

On January 5, 2016, Williams sent the business owner a text message, stating, “Hey Fella, I have 1 client right now that needs 15,750 in income. I need you to produce a 1099MISC form for that person. I will give you the information. Let me know how much more income you need to 1099.” Subsequently, at the business owner’s direction, Williams prepared two IRS Forms 1099 which falsely stated that, in 2015, his business paid one individual compensation of $15,800 and another individual compensation of $11,255, when both Williams and the business owner knew that no such compensation had been paid to those individuals.

Williams also prepared a personal tax return for the business owner which falsely reported the phony business expenses totaling $27,055, which both Williams and the business owner knew would fraudulently decrease the amount of tax that the business owner owed the IRS for calendar year 2015. Williams also reported the bogus business expenses as income on the tax returns of the two individuals referred to above, which resulted in both receiving unwarranted tax refunds from the IRS.

Williams is scheduled to be sentenced on April 17 and is facing up to five years in prison.

Federal court shuts down Illinois tax return preparer [Justice Department]
Last month, the U.S. District Court for the Northern District of Illinois permanently barred Jackelin Brooks, a tax return preparer in Bolingbrook, IL, from preparing federal tax returns for others.

According to the government’s complaint, Brooks prepared returns that reported false income and expenses from Schedule C businesses and improperly claimed the American Opportunity Tax Credit and the Residential Energy Credit, resulting in refunds to which her customers were not entitled. The complaint alleges that the falsified tax returns cost the United States tens of thousands of dollars in tax revenue.

The Dec. 12 injunction was entered against Brooks by default because she failed to defend against the government’s allegations.

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