Tax Return Preparer Sentenced To Three Years In Federal Prison For Preparing False Tax Returns

DALLAS — A defendant who admitted to a federal felony offense stemming from his preparation of false tax returns was sentenced yesterday, announced Acting U.S. Attorney John Parker of the Northern District of Texas.

Kenny Iroegbu was sentenced by U.S. District Judge Jorge A. Solis to 36 months in federal prison and ordered to pay $323,046 in restitution to the IRS. Iroegbu pleaded guilty in December 2014 to one count of aiding and assisting in the preparation of a false income tax return.

According to the factual resume filed, Iroegbu operated his own tax return preparation business, doing business as Homequest Vision Tax Service and Homequest Tax Service. Prior to starting his own tax preparation business in 2005, Iroegbu worked as an intern at Lynks Tax Service in Greenville, Texas.

The factual resume also states that Iroegbu prepared tax year 2005 and tax year 2006 returns out of an office located at 3030 LBJ Freeway, Suite 700, in Dallas; he prepared 2007 returns at an office located at 601 West Parker Road, Suite 103, in Plano, Texas.

The method employed by Iroegbu, according to the factual resume, included filing a client’s tax return using a false IRS Schedule F, Profit or Loss from Farming or a false IRS Schedule C, Profit or Loss from Business. Iroegbu would include the false Schedule on the client’s return and typically claim a loss if the client had Form W-2 wages or claim a net profit if the client did not have any Form W-2 wages. This gave the appearance to the IRS that the taxpayer was generating income.

In addition, according to the factual resume, Iroegbu would then put a false refundable fuel credit from taxes paid on un-dyed diesel fuel used on a farm, or for taxes paid on gasoline used for taxes paid on un-dyed diesel fuel used on a farm, or for taxes paid on gasoline used for other nontaxable use. These fuel credits were refundable regardless of whether the taxpayer had a tax liability or was due a refund before considering the fuel credit. Iroegbu claimed fuel credits on IRS Form 4136, Credit for Federal Tax Paid on Fuels.

The factual resume notes that Iroegbu prepared and electronically filed on behalf of his clients 66 tax year 2006 returns and 59 tax year 2007 returns claiming $1,294,749 in fuel credits of which $361,294 in false refunds was used by the IRS to offset any tax owed on the return. The remaining amount was paid to the taxpayers. Twenty-four fraudulent returns examined claimed refunds for Iroegbu’s clients totaling $237,996. The actual amount paid out by the government on these 24 claims totaled $126,582.49.

IRS Criminal Investigation investigated. Assistant U.S. Attorney Joseph M. Revesz prosecuted.