U.S. Attorney's Office Cautions Taxpayers To Beware Of Fraudulent Tax Preparers

CHARLOTTE, N.C. – With this year’s tax filing deadline approaching quickly, Acting U.S. Attorney William T. Stetzer urges taxpayers to beware of fraudulent return preparers and warns dishonest preparers that violating federal tax laws can lead to criminal actions and stiff monetary penalties.

The IRS’s Dirty Dozen Tax Scams represents the worst of the worst tax schemes that taxpayers may encounter and typically peak during filing season. Unscrupulous tax preparers are once again listed as one of the most common tax fraud schemes.

“Taxpayers rely on tax return preparers for their expertise and assistance with filing honest and accurate tax returns. When crooked preparers violate that trust, federal prosecutors will be there to hold them accountable,” said Acting U.S. Attorney Stetzer.

To highlight its message of deterrence to those who engage in the preparation of fraudulent tax returns, commit tax fraud and potentially expose their clients to serious consequences, the U.S. Attorney’s Office highlights the following criminal actions against tax preparers who have violated federal law:

On March 25, 2021, Aminta Smith, of Charlotte, was sentenced to 30 months in prison and one year of supervised release and ordered to pay $171,017 as restitution to the IRS.  According to the sentencing hearing, court documents and evidence presented at trial, Smith owned and operated a Charlotte-based tax preparation business, Touch by Angels Tax Services, also known as Touch by Angels Accounting Services and Smith Tax & Insurance Group, LLC. Between 2011 to 2016, Smith prepared fraudulent income tax returns for clients that claimed false education credits, false W-2 wages, and false Schedule C businesses to inflate the refunds paid by the IRS. In addition to filing fraudulent income tax returns for her clients, Smith falsified her own income tax returns by underreporting the fees she earned in her tax preparation business for tax years 2011 to 2015, and in some years failing to disclose that she was in engaged in the operation of a tax preparation business. In total, Smith caused more than $1 million in tax loss to the IRS.

On August 28, 2020, Elizabeth Pigatt, of Charlotte, was sentenced to four months in prison for filing false tax returns. According to court documents Pigatt owned and operated Pigatt Taxes Quick, a return preparation business in Charlotte.  Beginning in at least 2012 and continuing through 2016, the defendant prepared income tax returns for clients that claimed false education credits, false Premium Tax Credits, and false Schedule C businesses to inflate refunds paid by the IRS. In addition to filing fraudulent income tax returns for her clients, Pigatt falsified her own income tax returns by underreporting the fees she earned in her tax preparation business for tax years 2013, 2014, and 2015, and in her 2012 through 2015 tax returns also falsely claimed education credits and the incorrect filing status. The tax loss associated with the offense was more than $250,000 but less than $550,000.

In July 2020, Joseph Octave, Vonyeda Carson, Wendia Courtois, Melissa Greene, Natisha Holloman, Kimberly Joline, and Whitney Vargas-Medrano, all of Charlotte, were charged with conspiring to defraud the United States, aiding and assisting in the preparation of false tax returns for their clients, and in some cases filing false personal tax returns. According to court documents, Octave owned and operated Kapital Financial Services, a tax return preparation business with two offices located in Charlotte. Since 2014, Octave and his employees, including Carson, Courtois, Vargas-Medrano, Greene, Holloman, and Joline conspired to defraud the United States by preparing and filing tax returns on behalf of clients that claimed fabricated and fraudulent items, including Schedule A deductions, Schedule C business income and losses, American Opportunity credits, education credits, and earned income tax credits. Octave, Greene, Joline, and Vargas-Medrano trained Kapital Financial Services employees to falsify federal income tax returns. The training material provided to employees included scripts and cheat sheets. Furthermore, Carson and Courtois filed false personal tax returns. All seven defendants have pleaded guilty and are awaiting sentencing.

The U.S. Attorney’s Office reminds taxpayers to visit IRS’s website for tips on choosing a preparer, and to obtain information on how to avoid unethical tax preparers. The U.S. Attorney’s Office also urges taxpayers to protect themselves against a wide range of other tax schemes. In addition to tax preparer fraud, taxpayers are urged look out for and to avoid the following common schemes:

• Phishing
• Fake Charities
• Threatening Impersonator Phone Calls
• Social Media Scams
• EIP or Refund Theft
• Senior Fraud
• Scams Targeting Non-English Speakers
• Offer in Compromise Mills
• Fake Payments with Repayment Demands
• Payroll and HR Scams
• Ransomware

IRS Criminal Investigation works closely with the Department of Justice to shut down scams and to prosecute the criminals behind them. Education is the best way to avoid these common schemes.

To learn more about the Dirty Dozen scams and for help with recognizing and avoiding abusive tax schemes, the IRS offers educational material at www.irs.gov. Suspected tax fraud can be reported to the IRS using Form 3949-A found on the IRS.gov website. If you have been financially impacted by a tax return preparer’s misconduct or improper tax preparation practices you can file a complaint here.