Former IRS Employee Pleads Guilty to Tax Fraud Conspiracy

 

KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a former employee of the Internal Revenue Service pleaded guilty in federal court today to leading a conspiracy to steal taxpayers’ identity information in order to receive fraudulent tax refunds.

Taylor S. Knight, 32, of Kansas City, Mo., pleaded guilty before U.S. District Judge Howard F. Sachs to the charge contained in a March 18, 2014, federal indictment.

Knight worked as an employee of the IRS at the office at 333 W. Pershing Rd., Kansas City, from March 2009 to January 2012. Taylor admitted that she abused her position of trust when she inappropriately accessed the information of three taxpayers as part of a conspiracy to defraud the United States by using the stolen identity information to fraudulently induce the IRS into issuing tax refund payments.

For one of the victim taxpayers, Knight submitted a bogus online application for a prepaid debit card that was approved and mailed to an address in Oak Grove, Mo.; this debit card was never used. Knight admitted that she submitted this false online application to test whether her scheme to defraud the IRS was viable.

On Sept. 30, 2011, Knight used the information from two of the victim taxpayers (who were married) to submit a bogus online application for three prepaid debit cards. These debit cards were issued and mailed to the residence of the grandmother of her boyfriend and co-conspirator. According to her plea agreement, Knight admitted that her boyfriend monitored the mail sent to his grandmother’s address and retrieved the three prepaid debit cards. They agreed to use the grandmother’s address rather than use an address associated with Knight in an effort to conceal her role in this conspiracy to defraud the United States.

On Oct. 17, 2011, Knight submitted a 2010 tax return for the same two married victim taxpayers. The IRS approved a $46,572 refund, of which $5,000 was deposited on a debit card that had been obtained by Knight. The IRS attempted to deposit the remaining $41,572 refund on the other debit cards obtained by Knight, but the receiving banks rejected the deposits.

Knight admitted that, at her request, her boyfriend telephoned the IRS and falsely claimed to be the victim taxpayer. He allegedly provided the IRS representative with pertinent personal identification information for both victims and requested the IRS to send the remaining tax refund to a new address located in Independence, Mo. He identified this address because it was his former residence and he knew it was unoccupied.

In August 2011, the victim taxpayers filed legitimate amended tax returns. A $46,734 refund check was sent to the Independence address and was obtained by Knight. Knight admitted that she paid a second co-conspirator $500 to help her cash the refund check. Knight obtained false identification documents – including Social Security cards, credit cards and driver’s licenses – so that they could assume the identity of the victim taxpayers. They attempted to cash the stolen Treasury check at a local convenience store. The clerk was concerned about cashing such a large check and he went to his immediate supervisor for guidance. They told the clerk and his supervisor that, if they would cash the check, they could keep $6,000 of the proceeds.  The supervisor decided not to cash the check, but he told them to come back later. When Knight and her co-conspirator returned, the owner reported the incident to law enforcement. Police officers arrived about 10 minutes later and they were arrested.

Under federal statutes, Knight is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Special Assistant U.S. Attorney Trey Alford. It was investigated by the Treasury Inspector General for Tax Administration.