kC tax preparer pleads guilty to false tax returns
KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., tax preparer pleaded guilty in federal court today to aiding and assisting in filing fraudulent tax returns over a five-year period while paying herself exorbitant fees by taking the inflated refunds from her clients, which resulted in a tax loss to the United States of more than $100,000.
Vera Irene Smith, also known as Vera S. Bradley, 39, of Kansas City, pleaded guilty to the charge contained in a Feb. 9, 2011, federal indictment.
Smith admitted that she prepared and filed federal and state income tax returns for friends, family members, and others for tax years 2004 through 2008. Those returns contained false claims for credits and deductions to which the clients were not entitled, as well as falsified income claims. Smith prepared at least 53 fraudulent income tax returns, resulting in a tax loss to the government of approximately $112,300.
As part of her scheme, Smith generally told her clients that her fee was between $50 and $75, which she received in cash. However, Smith typically had her client’s tax refunds paid directly to bank accounts in her control or to debit cards for her own personal use, paying herself exorbitant fees frequently in the range of $700 to $1,700 per return. She did not tell her clients the full amount of their refunds and rarely provided them with copies of the submitted tax returns.
Smith was employed in an accounting role at the Full Employment Council (FEC) in Kansas City, Mo., for several years before resigning towards the end of 2005. Through this employment, she had contact with many program participants and solicited her tax services to several program participants at the FEC.
Smith has never claimed any income from her tax preparation activities on any of her personal federal income tax returns. The returns that she prepared did not provide any information that would identify her as the return preparer.
Under federal statutes, Smith is subject to a sentence of up to three years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Roseann A. Ketchmark. It was investigated by IRS-Criminal Investigation and the Department of Labor – Office of Inspector General.
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