It’s a scam that marries mortgage fraud, tax fraud and identity theft. And it could land a number of tax preparers in prison for a very long time. Jonathan Brownlee, a tax preparer in Philadelphia, could face 80 years in prison and $4 million in fines for allegedly using the names of 16 people to file for first-time homebuyer credits from the IRS, according to a recent indictment by the Department of Justice.
Brownlee won’t be alone in court. The Justice department filed similar cases against tax preparers in five states for running similar scams.
“We are working hard to ensure that those who try to cheat our country by filing phony claims for tax credits do not get away with it,” John A. DiCicco of the department’s tax division said in a press release.
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In response to the economic downturn, Congress passed a series of laws to stimulate the housing market by providing cash incentives of up to $8,000 to first-time homebuyers. Homes had to be purchased by June 30, 2010 to qualify, according to the IRS, making this the last tax season that taxpayers can claim the incentive on their taxes.
It’s also the last year for cheating tax preparers to swindle the money. Brownlee allegedly stole the identity of his customers and used them to file for the homebuying credit even though none of the people had actually bought homes. He then requested the IRS deposit the money into accounts he controlled.
Jose Cabrera, a tax preparer in Parr, Texas, used a similar scheme to claim at least $985,000 in credits in 2009, according to the release. Friday James, a former math teacher from Landsdowne, Pa., instructed many of his clients to do the same, even though they had not bought a house.
Image: Ray Tsang, via Flickr.com