Feds charge tax pro with filing thousands of false returns

By Ken Berry
 
Do you tell your clients to comply with the tax law? Make sure you practice what you preach. In an extreme example, a tax return preparer in Washington D.C. is facing criminal charges in federal court for allegedly scamming the IRS out of almost $14 million.
 
LaDonna Davis worked for 2FT Fast Facts Tax Service, a tax preparation firm owned by her aunt. Davis is accused of filing 3,044 falsified federal tax returns, 665 false D.C. returns and an undetermined number of false state returns. The Internal Revenue Service says that the federal returns generated $13,953,317 in fraudulent income tax refunds from 2006 through 2011.
 
According to court documents, Davis filed returns listing phony business entities, itemized deductions, and tax credits, causing the taxable income of clients to be grossly understated. Virtually every client received a fraudulent federal tax refund. If a client didn't have the documentation required to claim tax benefits, the IRS said Davis would simply come up with a figure needed to provide a favorable tax result. She also allegedly provided clients with false documentation for the charitable deductions in the event they were ever audited.
 
The only tax return preparation training David received came from her aunt. A plea bargain is expected in the case, while Davis's aunt is yet to be charged.
 
Related articles: 

You may like these other stories...

Did you know that the tax code allows you to claim tax deductions for household damage caused by thefts, vandalism, fires, floods, hurricanes, and others kinds of casualties? But the law imposes several restrictions.Relief...
Inversions: Loophole Is the ProblemJacob J. Lew, the U.S. Treasury Secretary, published an opinion piece in the Wall Street Journal that "the system has become full of inefficiencies and special-interest loopholes. That...
School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.