Va. tax preparer faces fraud charges

[AndyK]

Just goes to show that one doesn't have to be a taxpayer (or non-payer) to manipulate the system (Courtesy of WTOP News Radio):

A woman who ran a Fairfax tax preparation business faces charges that she falsified tax returns and kept her client's refunds.

Fairfax County police arrested Thuy Tien Le, of the 12800 block of Madeley Court, Tuesday and charged her with money laundering, obtaining money by a false pretense and two counts of identity theft with intent to defraud.

Investigators say she altered a client's tax documents before submitting them to the IRS and increased the amount of the expected refund. She then directed the refunds to be electronically deposited into an account other than her client's.

She operated a business called of T2 Advantage LLC, police say.

Police learned of the scheme in July when a former client of Le's tried to refinance their mortgage. Tax documents the mortgage company obtained from the IRS were different from the copies Le had provided the client, police say.

Police say additional charges could be filed against Le and ask that anyone who may have been defrauded by Le or was a victim of a similar crime to call detectives at 703-691-2131

Unfortunately, her clients are now on the hook with the IRS to (1) file correct, amemded returns and (2) repay (out of their own pockets) the excessive refunds. In all likelihood, the only way for them to make themselves whole (asuming the IRS waives the fines and penalties -- interest can NOT be waived) is to file a civil action against the preparer. Hopefully, she still has enough in reachable assets to come up with the money.

[Burnaby49]

In Canada both interest and penalties can be waived in situations like this and often are:

http://www.cra-arc.gc.ca/E/pub/tp/ic07-1/ic07-1-07e.pdf

This would fall under the catch-all Extraordinary Circumstances reason. Basically it is a "clean hands" concept. If the taxpayer could demonstrate due diligence and had no knowledge of the tax fraud he would be liable for the taxes he would have paid in absence of the fraud but would not be penalized. I don't think the CRA would go after them for the excess refund either. If it happened here the Crown would have been defrauded by the tax preparer not the taxpayer so I assume that the CRA would go after her. However I could be wrong on that point. If the CRA refuses a waiver request the taxpayer can appeal the refusal to the Federal Court of Appeal.

Waivers are not automatic and are in fact generally refused because the bulk of waiver requests are by taxpayers who just owe money than they don't want to pay. The usual case is a taxpayer who has been fighting to avoid paying a legitimate assessment for years then finally has to pay but want a decade of interest waived.

[Pottapaug1938]

Le's assets have to be findable before they can be reachable. If she buys gold, for example, and conceals it well, she may feel like she can wait out the legal process and then take her swag elsewhere once she is finished with the court proceedings, both civil and criminal.

[Number Six]

Well, I have seen a lot of cases like this. Thuy Tien Le must be feeling unbelievable stress with the press of law enforcement and the fear and anger of her customers also probably making it hard to sleep. After a certain point, lots of money or the distant hope that you will be able to enjoy it someday with other malcontent ex-pats., etc. does little to alleviate the pain of psyche that comes along with criminality. People will live to see the wheel of justice turn upon her. I still would like to know whether Lynn Meredith was able to enjoy any of those millions she bilked clients out of....