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Defendant Allegedly Aided in the Submission of More Than 40 Fraudulent Tax Returns and Hosted “Tax School” at which She Taught Prospective Tax Preparers How to Compose Fraudulent Tax Returns
December 2, 2021 - OAKLAND – A federal criminal complaint unsealed today charges Traci Austin with aiding and assisting in the preparation of fraudulent tax returns, announced Acting U.S. Attorney Stephanie M. Hinds and Internal Revenue Service, Criminal Investigation, and IRS-Criminal Investigation Special Agent in Charge Mark H. Pearson.
The complaint describes Austin, 44, of Brentwood, Calif., as the owner of a tax return preparation business called Emeryville Tax Services (“ETS”). According to the complaint, Austin prepared materially false and fraudulent tax returns for her clients by including false and/or inflated Schedule A expenses, false and/or inflated Schedule C income and expenses, and false dependents. By doing this, Austin fraudulently reduced her clients’ taxable income and tax liability, thereby resulting in larger refunds for the client and higher return preparation fee income for Austin. The investigation has revealed that Austin allegedly assisted in the preparation of at least 42 fraudulent tax returns and an estimated tax loss of well over $697,000 to the federal government.
In addition to the false and fraudulent tax return preparation scheme, the complaint also alleges that since 2016, Austin has hosted a “Tax School” through ETS and charged a fee of at least $200 for students to attend the tax school. According to the complaint, the goal of the tax school was to hire the attendees as preparers for ETS and prepare tax returns for ETS clients as well as the attendees’ own clients. During the tax school, Austin allegedly instructed prospective tax preparers how to fraudulently manipulate tax returns to generate the maximum tax refund, and thus the maximum tax preparation fee by listing fictitious side businesses under Schedule C and fake business expenses on Schedule A, for example, the complaint describes how Austin taught her students how she created a fictitious dog grooming business for a client, created a fictitious profit and loss statement for the fake business, and how she instructed the client to print out some photos of dogs to support the idea of her fictitious business.
Austin is charged with aiding and assisting in the preparation of false and fraudulent federal income tax returns, in violation of 26 U.S.C. § 7206(2).
The charges in the complaint are merely allegations and the defendant is presumed innocent unless proven guilty in a court of law.
If convicted, Austin faces a maximum penalty of three years in prison and a $100,000 fine; however, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Austin made her initial federal court appearance this morning before United States Magistrate Judge Kandis A. Westmore. Austin remains out of custody and her next scheduled appearance is at 10 a.m., on February 24, 2022, for a status conference before Magistrate Judge Westmore.
Assistant U.S. Attorney Abraham Fine is prosecuting the case with the assistance of Kay Konopaske and Helen Yee. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Source: DOJ Release
