Royal Palm Beach Man Sentenced to 33 Months for Tax Fraud Involving First-Time Home Buyer Tax Credit
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and José A. Gonzalez, Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (IRS-CI), announced that Gregory J. Salgado, Jr., 40, of Royal Palm Beach, FL was sentenced today by U.S. District Court Judge Kenneth A. Marra to 33 months in prison, to be followed by one year of supervised release following his conviction on tax fraud charges. Salgado was also ordered to pay $188,108.38 in restitution. Salgado previously pled guilty to one count of filing a false personal tax return with the Internal Revenue Service in violation of Title 26, United States Code, Section 7206(1); and to one count of preparing and filing a false tax return with the Internal Revenue Service for another taxpayer, in violation of Title 26, United States Code, Section 7206(2). The total tax loss to the United States was $570,000.
On January 23, 2012, an eight-count indictment was unsealed, charging that Salgado filed false income tax returns for himself and his clients in which he fraudulently claimed the First-Time Home Buyer Credit (FTHBC) and other tax credits and deductions. The Housing and Economic Recovery Act of 2008 (the Act) established a refundable tax credit for first-time homebuyers equal to 10 percent of the purchase price, up to $7,500, for home purchases completed in 2008. Under the Act, the taxpayer is required to repay the credit interest free over 15 years.
According to court documents, Salgado filed a personal income tax return for the tax year 2008 in which he falsely claimed the FTHBC of $7,500 even though he knew that he was not entitled to the credit because he had not purchased a home in 2008. In addition, Salgado operated a tax return preparation business in West Palm Beach in 2009, where he prepared tax returns and electronically filed them for his clients, usually for a fee of $175 per return. Salgado filed false tax returns for his clients for the tax year 2008 by entering fabricated information to support false claims that the taxpayers were entitled to claim the FTHBC and other credits and deductions and without supporting documentation from the taxpayer. Other credits and deductions falsely claimed by Salgado on his clients’ returns included the earned income tax credit, business expenses, home mortgage interest, gifts to charity, unreimbursed employee expenses and medical and dental expenses.
According to court documents filed in connection with his guilty plea, after numerous taxpayers received letters from the IRS requesting proof that the taxpayers had in fact purchased a home in 2008 to support their claim for a FTHBC, these taxpayers brought the IRS correspondence to Salgado, who promised to provide support to the IRS that would allow the taxpayers to keep the credit. On at least 21 occasions, Salgado then mailed to the IRS a fictitious Bank of America letter stating that the taxpayer was “approved” for a mortgage, in an attempt to convince the IRS that the taxpayer had purchased or was purchasing a home and was entitled to claim the credit. As Salgado knew, that letter was false and there was no home purchase and therefore no basis for those taxpayers to claim the credit. Through this scheme, between January 2009 and May 2009, Salgado submitted more than 75 tax returns that included false claims for the FTHBC.
Mr. Ferrer commended the investigative efforts of the Internal Revenue Service, Criminal Investigation Division. This case is being prosecuted by Assistant U.S. Attorney Lauren Jorgensen.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.