Falsified taxpayer education expenses resulting in education credits on prepared tax returns for a loss of more than $250,000
BOWLING GREEN, Ky. – Two former tax preparers pleaded guilty in United States District Court this week, before United States District Judge Greg N. Stivers, to conspiring to defraud the United States through preparing false tax returns and aiding in the preparation of the false returns at a tax preparation office in Logan County, Kentucky, announced United States Attorney John E. Kuhn, Jr.
Defendants Tara L. Mitchell and Mechelle Blankenship were initially charged in a 21-count grand jury indictment, that was unsealed March 21, 2016. According to the plea agreement, the defendants worked together at Triple J Tax, a tax return preparation office located in Russellville, Kentucky. Mitchell managed the office and in 2012, hired and trained defendant Blankenship to prepare tax returns.
The defendants admitted yesterday, in separate plea agreements, that between March 2012, and November 2014, they knowingly agreed to defraud the United States by preparing and electronically filing U.S. Individual Income Tax Returns, on behalf of themselves and clients of Triple J Tax, which contained statements that they knew were false and fraudulent as to material matters, thereby causing the Internal Revenue Service to pay tax refunds that were not due under provisions of the Internal Revenue laws. The loss was more than $250,000.
Specifically, the returns stated the taxpayers had incurred educational expenses, when they had not, and thus falsely claimed education-related credits, to which the taxpayers were not entitled.
Further, in the course of the conspiracy, Mitchell and Blankenship also included fraudulent education credits on their own tax returns. On or about January 10, 2013, Mitchell and Blankenship prepared Mitchell’s 2012 tax return, fraudulently claiming education expenses in the amount of $3,500, resulting in a $950 American opportunity credit. On or about April 11, 2013, Mitchell and Blankenship prepared Blankenship’s 2012 tax return, fraudulently claiming education expenses in the amount of $4,000, resulting in a $371 American opportunity credit and a $557 education credit.
If convicted at trial, Blankenship could be sentenced to up to 41 years in prison, fined $1,450,000 and required to serve a 3 year period of supervised release. Mitchell could be sentenced up to 29 years in prison, fined $1,050,000 and required to serve a 3 year period of supervised release.
Assistant United States Attorney Amanda E. Gregory is prosecuting the case. The Internal Revenue Service (IRS) Criminal Investigation office is conducting the investigation.