A New Jersey tax preparer was arrested on charges related to fraudulently seeking over $124,000,000 from the IRS by filing over 1,000 tax returns falsely claiming COVID-19-related employment tax credits.
In response to the COVID-19 pandemic and its economic impact, Congress authorized an employee retention tax credit that a small business could use to reduce the employment tax it owed to the IRS, also known as the “employee retention credit” or ERC.
Congress also authorized the IRS to give a credit against employment taxes to reimburse businesses for the wages paid to employees who were on sick or family leave and could not work because of COVID-19. This “paid sick and family leave credit” was equal to the wages the business paid the employees during the sick or family leave, also subject to a maximum amount.
According to court documents, from November 2020 to May 2023, Leon Haynes of Teaneck, New Jersey, allegedly repeatedly exploited a program created to help small businesses impacted by the COVID-19 pandemic. Acting as a tax preparer, Haynes allegedly prepared and submitted approximately 1,387 false forms to the IRS claiming COVID-related tax credits on behalf of himself and clients. The complaint further alleges that Haynes falsely told his clients that the government was giving out COVID-relief money for businesses and that they were eligible for the money simply because they had a business. Allegedly, without consulting with his clients, Haynes then submitted forms to the IRS on behalf of their businesses that grossly overstated the number of employees and amount of wages paid. Haynes allegedly submitted similarly false forms for three of his own companies.
Based on these and other misrepresentations, Haynes’ conduct allegedly sought approximately $124,751,995 in tax refunds on behalf of his companies and numerous other businesses in his clients’ names. The IRS allegedly mailed Haynes multiple tax refund checks totaling $1,007,966 for his own companies and allegedly disbursed a total of $31.6 million in refunds to Haynes’ clients and himself based on the false tax forms that Haynes submitted. The complaint further alleges that Haynes charged many clients a fee of as much as 15% of the refund they received.
If convicted, Haynes faces a maximum penalty of three years in prison for each count of aiding and assisting in the preparation of a false return and 20 years in prison for mail fraud. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Philip R. Sellinger for the District of New Jersey made the announcement.
IRS-Criminal Investigation, Social Security Administration-Office of the Inspector General, and the U.S. Postal Inspection Service are investigating the case.
A complaint/information is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
No comments:
Post a Comment