Aurora Return Preparer Pleads Guilty To Filing False Tax Returns
DENVER – Keith G. Smith, age 54, of Aurora, Colorado, pled guilty yesterday before U.S. District Court Judge Raymond P. Moore for filing and assisting in preparing false tax returns, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Judge Moore is scheduled to sentence Smith on December 9, 2014. Smith was indicted by a federal grand jury in Denver on March 11, 2014.
According to information contained in the indictment and plea agreement, beginning in 1987 Smith operated a tax return preparation business. He told some of his clients that he formerly worked for the IRS and conducted audits, seized assets, and carried a weapon. When in fact, for about four years Smith worked in an administrative positon at the IRS; he was not a criminal investigator, he did not conduct audits, and he did not seize assets. In 2000, the IRS assessed Smith a civil penalty because of underreported tax liabilities on returns that he had prepared for clients. Smith thereafter continued to prepare clients' returns but no longer signed them as preparer, instead indicating on the returns that they were prepared by the taxpayers.
Among the returns that Smith prepared for the years 2006 through 2010 were 40 false tax returns requesting refunds, in amounts ranging from $715 to $7,124, all of which the IRS paid. Many of the returns falsely claimed deductions for medical and dental expenses, home mortgage interest payments, education expenses, and charitable contributions. The false statements on the 40 returns resulted in a total tax loss of $138,148. In addition, Smith falsified his personal income tax returns for years 2008 and 2009.
On December 8, 2011, two IRS special agents interviewed Smith at his residence in Aurora and the agents informed Smith that he was under investigation for preparing false returns for clients and for his own returns. Smith acknowledged that he had been preparing returns for clients since his IRS employment ended and he admitted that he falsified clients' returns. Smith said he falsified Schedules C and misstated other items on clients' returns. "I'm ready to bite the bullet," he said. "I did it. It's done. I'm guilty."
Each of the charges to which Smith pled guilty, one count of aiding and assisting in the preparation of a false tax return and one count of filing a false tax return, carries a penalty of not more than 3 years in federal prison and a fine of up to $100,000.
This case was investigated by Internal Revenue Service – Criminal Investigation.