North Carolina Woman Sentenced for Role in Widespread Tax Return and Identity Fraud Conspiracy
The Justice Department and the Internal Revenue Service (IRS) announced that a Durham, North Carolina, woman was sentenced today to serve 30 months in federal prison for conspiring to defraud the IRS.
Tasha Renee Smith was sentenced in Greensboro, North Carolina, by U.S. District Judge Catherine Eagles, who ordered her to serve three years of supervised release and to pay restitution to the IRS in the amount of $375,578. Smith pleaded guilty on April 8 to the conspiracy charge.
According to court documents, Smith was employed by Nothing But Taxes (NBT), a tax return preparation business with branches throughout North Carolina, for parts of the filing seasons for tax years 2005, 2006 and 2007. While working at NBT’s Durham location, Smith intentionally falsified tax returns for many clients. Common techniques she employed include the addition of false dependents to tax returns and inflating the Earned Income Tax Credit for low-income clients by adding additional, fictitious income.
According to court documents, during her second and third seasons preparing returns at NBT, Smith made extensive efforts to solicit and purchase the names, dates of birth and social security numbers of individuals in the community. Smith used the identities she purchased as false dependents on returns she prepared at NBT later that tax year. Smith charged clients a side cash payment in exchange for a false dependent, in addition to the flat return preparation fee charged by NBT.
According to court documents, during the 2008 tax filing season, Smith and two business partners opened their own tax return preparation business, Tax Wizards, with branches in Durham and Roxboro, North Carolina. Smith owned and operated the business, and hired her own return preparers. Like NBT, Tax Wizards became a center of tax fraud. Smith encouraged return preparers she hired at Tax Wizards to keep any falsifications on tax returns they prepared modest, in the $1,200 to $1,500 range, to avoid IRS scrutiny. Smith knew that return preparers she employed at Tax Wizards were falsifying returns for clients because she had cautioned the return preparers to keep any falsifications modest and because she witnessed some falsifications occur on the premises. Smith intentionally tried to avoid being physically present at Tax Wizards, in part to avoid the hassle of day-to-day management, but also because she did not want to be present while she knew fraud was occurring.
Court documents state that Smith and another person opened a tax return preparation business during the 2009 tax filing season called Keystone Tax Services, also in Durham. Keystone also became a hotbed of tax fraud. Smith also intentionally tried to avoid being physically present at Keystone for the same reasons as with Tax Wizards. Around April 2011, Smith closed down Tax Wizards and Keystone. Smith became aware that return preparers at her businesses were falsifying returns by creating fictitious Form W-2’s ostensibly issued by non-existent businesses. The falsification was so rampant and involved so much money that Smith feared IRS detection, so she shuttered Tax Wizards and Keystone.
According to court documents, during filing season for tax year 2011, in January to April 2012, Smith and other investors opened a business called Tax Solutions. Tax Solutions had four branches throughout North Carolina, specifically, in Roxboro, Durham, Burlington and Kinston. Smith was hired in exchange for a share of the business’s profits and was charged with hiring managers for the various Tax Solutions branches. She hired at least one manager whom she knew to be complicit in the fraudulent practices at Tax Wizards and Keystone. Return preparers at Tax Solutions also falsified numerous tax returns for their clients.
The case against Smith was investigated by Special Agents of IRS-Criminal Investigation. It was prosecuted by Assistant U.S. Attorney Frank Chut for the Middle District of North Carolina and Trial Attorney Jonathan Marx of the Justice Department’s Tax Division.