Houston Tax Return Preparer Convicted of Falsifying Personal and Client Tax Returns
HOUSTON – Frances King Diaz has entered a plea of guilty for falsifying personal and client tax returns, announced U.S. Attorney Kenneth Magidson along with Special Agent in Charge Rick Goss of Internal Revenue Service – Criminal Investigation (IRS-CI).
According to the factual basis in support of the plea, Diaz claimed false deductions for herself and for clients of A&F Tax Service that generated fraudulent tax refunds totaling approximately $411,722 for tax years 2008 through 2012.
“While most return preparers provide excellent service to their clients, a few unscrupulous tax preparers file false and fraudulent returns to defraud the government, the honest tax-paying public and their own clients,” said Goss. “CI will continue to work to ensure that all tax practitioners adhere to professional standards and follow the law.”
During today’s hearing, Diaz admitted she filed tax returns for herself that substantially understated the business income of A&F Tax Service. The most egregious was a 2009 tax return that reported business income of only $11,205 from the tax preparation service when approximately $164,526 should have been reported. The plea agreement stipulated that this understatement alone cost the National Treasury $53,895. Diaz admitted that similar understatements in her 2010 thru 2012 tax returns cost the National Treasury another $144,756 for a total of approximately $198,651. Diaz has already made full restitution to the IRS for these losses.
Diaz also acknowledged that she sought to enhance the reputation of A&F Tax Service by generating large income tax refunds for her clients. In doing so, Diaz admitted she had inflated various deductions, credits and business losses in at least 35 tax returns for at least 15 clients for tax years 2008 through 2012 causing losses to the National Treasury of approximately $213,071. While these losses can be recovered from the taxpayers who received the refunds, Diaz could also be ordered to pay restitution at the time of sentencing.
U.S. District Judge David Hittner, who accepted the guilty plea, has set a sentencing date of July 15, 2016, at which time Diaz faces up to three years in prison and $250,000 fine. She was permitted to remain on bond until that hearing.
The investigation leading to these charges was conducted by IRS-CI. Assistant U.S. Attorney Jimmy Sledge Jr. is prosecuting the case.