News and Press Releases

Preparer Overstated Deductions for 37 Clients, Illegally Lowering Tax Bills

August 1, 2007

EPHRAIM A. ROLLOLAZO, 56, of Maple Valley, Washington pleaded guilty in U.S. District Court in Seattle yesterday to Aiding and Assisting in the Preparation or Presentation of Materially False Tax Returns. ROLLOLAZO faces up to three years in prison and a fine of $250,000 when he is sentenced by U.S. District Judge Marsha Pechman. A sentencing date has not been set.

According to the plea agreement, ROLLOLAZO operated Turbo Tax Systems, LLC with offices in Seattle and Kent, Washington. Between 2000 and 2004, ROLLOLAZO prepared 114 tax returns for 37 clients on which he overstated their itemized deductions. Because of these deductions, taxpayers underpaid their taxes by approximately $154,000. ROLLOLAZO has agreed to pay $70,722 restitution to the United States.

According to a search warrant filed in the case, an undercover IRS agent went to the Turbo Tax Systems office in Kent in March of 2004 after the IRS observed irregularities in the tax returns coming from the business. For example, a review determined that in an unusually high percentage of the returns, the itemized deductions were more than half of the taxpayers’ income. Many of the returns had the exact same dollar amounts for deductions such as job search expenses, and all 252 returns reviewed claimed exactly $500 in non-cash or check charitable donations. The undercover agent provided information for the preparation of his tax return. The preparer claimed deductions the agent never authorized and the preparer left them on the return even when the agent told the preparer the figures were not accurate. Ultimately the return overstated the undercover’s tax refund by more than $1,300.

The case was investigated by the Internal Revenue Service Criminal Investigations (IRS-CI) and was prosecuted by Assistant United States Attorney Jim Lord.

For additional information please contact IRS-CI Public Affairs Officer Dan Wardlaw, at (360) 696-7647 (ex. 3) or Emily Langlie, Public Affairs Officer for the United States Attorney’s Office at (206) 553-4110.

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