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Justice News

Department of Justice
U.S. Attorney’s Office
District of Montana

Thursday, August 21, 2014

Former Belgrade Resident Convicted Of Preparing False Tax Returns

BUTTE - A former Belgrade woman was convicted on August 20, 2014 of five counts of aiding or advising a false tax return. Francis Bercaw faces 3 years in prison, $250,000 in fines, and 1 year supervised release for each count. Bercaw has been released pending sentencing on December 4, 2014, in Missoula.

During a three-day trial at the U.S. District Court in Butte, the government presented evidence that Frances Bercaw prepared false tax returns in order to boost clientele for her tax preparation business, Fran's Tax Service. Clients would patronize her business, and Bercaw would fabricate numbers on the clients' tax returns in order to maximize their refunds. Five former clients testified that Bercaw created false business expenses on their tax returns. Bercaw's scheme was revealed when the clients were audited by the IRS and the Montana Department of Revenue.

Bercaw started Fran's Tax Service in Virginia in 1974 before moving it to Montana in the early 2000s. In 2007, Bercaw's daughter-in-law Michelle Caudle joined her in Bozeman. Bercaw and Caudle consistently prepared false returns in order to increase their clients' refunds. Bercaw would create a Schedule C (Profit or Loss from a Sole Proprietorship) for her clients even though they did not own a business. Bercaw did not review the returns with the taxpayers prior to filing. They eventually discovered the false Schedules C after being audited.

Agents testified they interviewed Bercaw on April 14, 2010. When asked about the returns she prepared, Bercaw stated that all the mileage from the taxpayer's home to his or her work was treated a commuting, and she did not intentionally include commuting mileage as a business expense. According to Bercaw, if a person was trying to make a profit, it would be considered a Schedule C business. It would not be a business if someone was just engaged in a hobby. Bercaw also stated she tried to review all tax returns with her clients upon completion. She also stated that a taxpayer had to provide a receipt to get an expense. In fact, Bercaw previously told Caudle that driving back and forth to work is considered a deductible expense. Bercaw also told Caudle to create a Schedule C if someone hunts or fishes. Bercaw also stated it was okay to create a Schedule C for a hobby.

Caudle previously pleaded guilty to aiding or advising a false tax return and is scheduled to be sentenced on December 4, 2014 in Missoula.

The case was investigated by the Internal Revenue Service, Criminal Investigations Division. Assistant U.S. Attorney Chad Spraker prosecuted the case for the government.

Updated January 14, 2015