CORPUS CHRISTI – An Alice woman admitted to willfully aiding and assisting in the preparation of false United State Income Tax Returns for others and herself, announced Acting U.S. Attorney Abe Martinez along with Special Agent in Charge Rick Goss of IRS - Criminal Investigation (CI).
Cristina Gonzalez, local tax return preparer, pled guilty Monday after she admitted that she defrauded the United States by not reporting income she had earned on her personal income tax return and preparing fraudulent tax returns for others.
“This action today serves to show that running a business based around defrauding the U.S. taxpayers is no way to do business. Gonzalez, acting as a tax return preparer, submitted numerous false tax returns to the IRS causing the loss of hundreds of thousands of dollars,” Goss said. “This type of dishonesty will not go unpunished. IRS-CI will continue to track down and stop unscrupulous tax return preparers.”
During tax years 2011 through 2014, Gonzalez operated a tax preparation business in Alice which prepared and filed more than 1,200 federal income tax returns for clients. More than 99 percent of returns Gonzalez prepared claimed a refund and nearly 60 percent of the returns claimed the maximum earned income tax credit.
An IRS review of returns Gonzalez filed showed many of the returns included suspicious “household help” income in specific amounts which maximized earned income credits and resulted in significantly larger tax refunds to her clients.
IRS agents located and interviewed the taxpayers associated with 47 of these returns. The income each of these taxpayers reported was significantly less than the amount of income reported in the tax returns Gonzalez filed, and virtually all of the taxpayers denied earning any significant household help income or reporting any such income to Gonzalez.
The false representations in the tax returns Gonzalez prepared caused a tax loss to the United States of $223,305 in these 47 returns alone.
Gonzalez also prepared and filed her own personal federal income tax returns for 2011, 2012, 2013 and 2014. In each of these returns, she failed to report any income generated through her tax preparation business. Gonzalez collected fees from clients ranging from $350 up to $2,280 per return. Gonzalez received many of these fees by instructing the IRS to “split” the taxpayer’s refund and send a portion of the refund to bank accounts Gonzalez owned or controlled.
Between 2011 and 2014, Gonzalez failed to report $276,842.71 in split fees as income on her personal income tax returns. The failure to report this income resulted in substantial unpaid taxes owed to the United States.
Senior U.S. District Judge John D. Rainey accepted the plea and has set sentencing for Oct. 16, 2017. At that time, Gonzalez faces up to five years in federal prison for the personal tax evasion as well as another three years for aiding in the preparation of false tax returns for others. Both convictions also carry a possible $250,000 maximum fine.
She was permitted to remain on bond pending her sentencing hearing.
IRS-CI conducted the investigation. Assistant U.S. Attorney Robert D. Thorpe Jr. is prosecuting the case.