Tax fraud brings record fines

The New York State Department of Taxation and Finance last week slapped civil penalties of $606,000 on the two convicted owners and operators of a now defunct Ridgewood tax preparation business.
The fines are the largest penalties the department has ever imposed against paid tax preparers for filing fraudulent tax returns.
Briseida Christopher, 65, of Brooklyn, the owner of Gypsy Travel and Juana DeCastro of Woodhaven, a tax preparer who worked at the Gypsy Travel office pleaded guilty this past summer to felony charges relating to the preparation and filing of false income tax returns.
Christopher and DeCastro were indicted in February 2007 and charged with multiple felony counts for filing fraudulent New York State personal income tax returns for clients and for themselves. They were also cited for secretly charging their client’s additional tax preparation fees - sometimes as much as $600 per client - against their refund anticipation loans.
To generate false refunds, Christopher and DeCastro inflated their clients’ itemized deductions and reported false business and rental losses. Christopher was sentenced on February 8 to time served and probation. DeCastro is scheduled to be sentenced in April. She faces a maximum sentence of six months in jail and probation.
Both pleaded guilty this past summer to felony charges relating to the preparation and filing of false income tax returns.
Section 685-R of the New York Tax Law authorizes the department to impose a $5,000 penalty upon paid tax preparers who knowingly assist taxpayers to file false state tax returns to evade their tax responsibilities.
Community Board 9 member, Latchman Budai, has full confidence in his tax preparer, a CPA (Certified Public Accountant), with whom he has done business with for the last 20 years. “He’s very good. He’s honest. He doesn’t do anything nonsensical. Everything he does you have to produce documents,” Budai said.
Taxpayers are responsible for the accuracy of their returns despite the actions of the tax preparer. If a tax preparer informs a client that a return does not have to be accurate, they are being misleading and their advice can lead to civil and criminal penalties against both the taxpayer and the preparer. The taxpayer is the responsible party when State Tax Department and IRS disallow fraudulent credits or deductions. The taxpayer is responsible not only for the actual tax obligation, but may face additional interest and penalties associated with any outstanding liability.
Taxpayers who have filed an inaccurate return prepared by a paid tax preparer should file an amended return with the correct information. Taxpayers who voluntarily disclose this information can avoid significant penalties by exposing the misconduct committed by their preparer and by aiding the tax department in its investigation of that preparer. If you suspect a tax preparer of tax fraud, call the State Tax Department at 1-888-675-9437 or visit the Department’s website at www.nystax.gov.
Helpful tips to remember when using a paid tax preparer:

  • Avoid preparers who charge a percentage of your total refund as a fee.
  • Make sure you have all contact information for your preparer for any follow-up questions after taxes have been filed.
  • Review your return before you sign it and do not sign any blank or incomplete form.
  • Ask for information in writing from the tax preparer relating to the total cost of the service and the interest rate on any refund anticipation loan you will receive.
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