News and Press Releases

kC tax preparer sentenced for false returns

FOR IMMEDIATE RELEASE
April 20, 2012

KANSAS CITY, Mo. – David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., tax preparer was sentenced in federal court today for aiding his customers in filing false tax returns.

Carlos Cruz, 56, of Kansas City, was sentenced by U.S. District Judge Ortrie D. Smith to two years and three months in federal prison without parole.

On Jan. 13, 2012, Cruz pleaded guilty to aiding in the preparation and filing of false and fraudulent tax returns.

Cruz, who conducted business from his home through the unincorporated entity Carlos Income Tax Services, has prepared thousands of federal income tax returns since 1992, although he has never been enrolled as a tax preparer with the IRS and is not a public accountant. Cruz has no professional licenses and no college degrees. His only education or training in the area of taxation are some H&R Block courses and some classes related to Drake Software, a tax preparation software company.

Cruz admitted that he engaged in result-based tax return preparation, where the goal is to maximize refunds rather than accurately report his customers’ actual income and allowable credits and deductions. Cruz was reported to have told customers, “just tell me how much you want to pay or want for a refund.” Although many of Cruz’s customers would bring copies of their tax documents, such as Forms W-2 and 1099 and receipts for potentially deductible expenses, Cruz often ignored them and instead reported unsupported amounts on customers’ federal income tax returns.

Cruz admitted that he prepared more than 7,000 federal income tax returns for tax years 2004 to 2008. Although the full tax loss to the federal government is unknown, the tax loss for the 16 returns outlined in the charges totals $133,133.

This case was prosecuted by Assistant U.S. Attorney Roseann A. Ketchmark. It was investigated by IRS-Criminal Investigation.

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