From the Tax Law Offices of David W. Klasing - Florida Tax Preparer Banned from Filing Returns After Court Finds Evidence of Tax Fraud

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Tax Law Offices of David W. Klasing, PC

Mar 08, 2019, 15:47 ET

IRVINE, Calif., March 8, 2019 /PRNewswire/ -- The U.S. Department of Justice issued a press release announcing that defendant Ndaiziwei Kaya Chipungu and his tax preparation business, Society Financial Solutions, LLC, would be banned from preparing and filing tax returns, or from assisting with such services. According to court records Chipungu was "Fabricating itemized deductions," "improperly claiming false filing statuses," and "claiming education credits to which… customers were not entitled": all common examples, when executed willfully, of tax fraud. With the April 15 deadline to file 2018 taxes rapidly approaching, it may feel tempting to fudge the filing process – but be careful. Working with a tax preparer who breaks the rules and engages in fraud could cost you your money, your business, and even your freedom.

Tax Preparer Claimed False Credits, Deductions, Filing Statuses for Clients

The court also ordered that Chipungu and Society Financial Solutions to disgorge $487,879.24, representing the ill-gotten gains that they received for the preparation of tax returns.

Chipungu "prepared at least 1,081 tax returns" during 2011 through 2018. Chipungu helped clients defraud the government while simultaneously "charging deceptive and unconscionable fees" for the service. He stands accused of the following:

"Failing to identify the actual paid preparer of the tax return"
Claiming false deductions (which, as the IRS noted, was also among the Dirty Dozen top tax frauds of 2018)
Claiming false filing statuses, such as "married filing jointly" or "head of household," when not applicable
Falsely claiming IRS education credits, which presently include the lifetime learning credit and American Opportunity Tax Credit (AOTC)
Falsely claiming the Earned Income Tax Credit (EITC), which is only available to qualified "working people with low to moderate income"
Avoiding due diligence rules to increase the aforementioned EITC
Not providing clients with copies of tax returns for recordkeeping
Reporting false information concerning business expenses and income

The IRS discovered tax preparer fraud by performing tax audits ("examinations"), which revealed that among five dozen returns prepared by Chipungu – 31 for 2014, plus 29 for 2015 – 100% resulted in tax deficiencies. If an IRS tax audit reveals indicators ("badges") of fraud, the next step may be a criminal investigation. See the full version of this article HERE.

Contact: Dave Klasing Esq. CPA, [email protected]

SOURCE Tax Law Offices of David W. Klasing, PC