A New Jersey tax preparer was arrested after authorities alleged that he filed a large number of false tax returns claiming COVID-related employment tax credits. According to the allegations, the returns claimed credits that were not actually available to the preparer’s clients, resulting in millions of dollars in improper refund claims. This case is a reminder that taxpayers and business owners should understand what is being filed in their name and why exaggerated or unsupported credit claims can create serious problems.
The New Jersey tax preparer arrested in this case allegedly filed returns involving COVID-related employment tax credits that authorities say were not available to the clients.
New Jersey tax Preparer Arrested: What Happened?
According to authorities, the preparer filed 1,387 tax returns that allegedly claimed more than $124 million in false COVID-19 employment tax credits. The charges state that he told clients they qualified for government relief funds simply because they had a business.
Authorities allege that, without fully discussing the returns with his clients, he submitted forms that greatly overstated the number of employees and wages paid. The same allegations also state that he filed similar returns for three of his own companies.
Based on those filings, authorities say he received more than $1 million in checks from the U.S. Treasury through his own companies, while clients allegedly received more than $31.6 million in refunds. Authorities also allege that he charged a 15% fee, often paid in cash.
Why This Case Matters
This case matters because it shows how easily a taxpayer or business owner can become involved in a serious tax problem when a return is filed using false numbers, unsupported wages, or credits that do not actually apply.
COVID-era tax credits and relief programs created opportunities for legitimate claims, but they also created opportunities for abuse. When returns are filed inaccurately, the IRS may later examine the claim, reverse the refund, assess penalties and interest, and in some cases pursue civil or criminal enforcement.
What Taxpayers and Business Owners Can Learn
One important lesson is that taxpayers should never assume a preparer is automatically correct simply because the preparer says a credit is available. If a return is being filed in your name or for your business, you should understand:
- what form is being filed
- what credit or refund is being claimed
- why you qualify
- what numbers are being used
- whether the facts can be supported with records
Another lesson is that unusually large refund promises, aggressive marketing, or requests for large contingency-style fees should raise concern. Taxpayers and business owners should be cautious when someone suggests that “everyone qualifies” or that a credit can be claimed without a careful review of payroll records, wages, or other supporting information.
What Happens in a Case Like This?
According to the charges described in the case, each count of preparing and submitting a false tax return carries the potential for significant penalties, including imprisonment and fines if there is a conviction. For taxpayers whose returns were filed incorrectly, the consequences may include IRS notices, repayment demands, audits, penalties, and the need to correct previously filed returns.
What Should You Do If You Are Concerned About a Return Filed for You?
If you believe a preparer may have claimed credits or filed returns incorrectly for you or your business, the first step is to obtain copies of the returns that were filed and review exactly what was reported. It is also important to gather payroll records, business records, and any communications about the refund or credit claim.
TR360 helps taxpayers and business owners review questionable filings, understand what may have been claimed, and determine what steps may be needed when IRS notices, audits, or refund issues arise.