Former Federal Way, Washington Tax Preparer Sentenced to Prison in Repeat Case of Filing Fraudulent Tax Returns
Convicted in 2003, Defendant Returned to Tax Fraud following Prison Term
A former tax return preparer is now facing a second 37-month prison term, followed by three years of supervised release, for preparing false tax returns, after serving more than two years in prison for her first conviction, announced U.S. Attorney Annette L. Hayes. KWANGBAE P. KIM, 63, operated “Tea and Tax” in Federal Way, Washington. From 2011 to 2016, KIM engaged in a scheme to file false income tax returns–mirroring the scheme that had resulted in a 27-month prison term in 2003. At sentencing, Chief U.S. District Judge Ricardo S. Martinez said, “The Court’s largest concern is that she failed to learn from her prior time in prison.”
“Instead of learning from her past crimes, this defendant chose to go right back to abusing our tax system,” said U.S. Attorney Annette L. Hayes. “Along the way, she betrayed her clients and a family member. I commend the work of the Internal Revenue Service, Criminal Investigations special agents in this case, and so many others, to ensure our tax system serves our country and is fairly enforced.”
According to records filed in the case, in 2003, KIM prepared tax returns for customers with false and fraudulent business expenses. After the IRS investigation began and agents contacted some of KIM’s clients, she orchestrated “cover stories,” had clients rehearse their stories, and gave them falsified documentation to try to make the fraudulent expense deductions look legitimate. The tax loss in the 2003 case was $430,000.
After the prison sentence, KIM returned to tax preparation and again prepared returns with false and fictitious expense deductions. Between 2011 and 2016, KIM prepared more than 30 false tax returns resulting in a tax loss of at least $113,000. In order to try to hide her conduct, KIM used other people’s Preparer Tax Identification Numbers (PTIN). These numbers are assigned by the IRS so it can identify who prepared the return. KIM applied for a PTIN in the name of a relative who did not prepare taxes and did not know about the PTIN. She also used the PTINs of two other people. As in the 2003 case, when the IRS started asking clients about their deductions, KIM encouraged them to lie to the IRS and provide false and misleading documents.
While KIM did not directly profit from the increased tax refunds enjoyed by her clients, the refunds may have increased her profit by encouraging others to use her business. Of the $113,000 tax loss, KIM’s clients have paid most of the loss after their returns were audited. Chief Judge Martinez ordered KIM to pay restitution of the remaining $29,478.
The case was investigated by Internal Revenue Service Criminal Investigations (IRS‑CI). The case is being prosecuted by Assistant United States Attorneys Michael Dion and Matthew Diggs.