President Donald Trump signed the new 2018 tax law “Tax Cuts & Jobs Act” (TCJA)…
Tax preparer sentenced to prison for fraudulent deductions on federal income tax returns
A tax preparer was recently sentenced in U.S. District Court in Seattle, to a year and a day in prison for 14 counts of aiding and abetting the filing of false tax returns. Jean Mpouli worked as an aviation inspector for the Federal Aviation Administration (FAA), while on the side he ran a tax preparation business with hundreds of clients, offering his services primarily to African immigrants. At the 3-day trial in September 2021, prosecutors showed how Mpouli falsely increased deductions for unreimbursed business expenses and educational expenses to boost his clients’ tax refunds. Mpouli took a percentage of the refund as his fee, so the higher the refund, the larger the fee. Further, on his personal tax returns, Mpouli hid over $200,000 of revenue generated from his illegal side business.
At the sentencing hearing U.S. District Judge John C. Coughenour ordered Mpouli to pay $31,296 in restitution, and imposed one year of supervised release following the prison term.
According to records filed in the case and testimony at trial, in late 2016 an analyst with the IRS noted that an unusually large number of returns prepared by Mpouli claimed deductions for unreimbursed business expenses. In 2017, the IRS Criminal Investigation Division sent an undercover officer into the business to get an up-close look at how Mpouli prepared tax returns. Using the W-2 information the undercover officer supplied, Mpouli rightly determined the agent owed approximately $800 in taxes. However, Mpouli then offered to enter in approximately $34,000 in fraudulent expenses in order to boost the undercover officer’s refund to more than $5,600. Mpouli explained that the undercover officer should consider the refund as a “loan” in the event the officer was audited by the IRS. Mpouli then accepted $250 in cash as his fee for preparing the fraudulent return.
When agents executed court authorized search warrants on the business in September 2017, they found more than 1,200 personal tax returns on Mpouli’s computers. Hundreds of the tax returns show suspiciously high amounts of unreimbursed business expenses and education expenses. In one example, Mpouli claimed a client had driven more than 33,000 miles for business in one year. However, the client did not own a vehicle, did not have a driver’s license, and had never driven a vehicle in the U.S.
When investigators conducted a random sampling of the clients who had used Mpouli’s services, they said they were not aware of the extent of the deductions he had claimed on their behalf. Many did not own vehicles even though Mpouli listed unreimbursed car expenses. Others never attended the educational institution listed on the returns. In some instances, he claimed children were attending the secondary education institution, even though the children were actually enrolled in daycare or elementary school. The clients said Mpouli did not discuss the returns with them before filing, and when they were notified that they were being audited, he refused to assist them.
In all, the government estimated the tax loss to be nearly $3.5 million.
The case was investigated by Internal Revenue Service Criminal Investigation, which routinely investigates fraudulent tax preparers.
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