Eversley E. Barrett, 64, who operates the tax preparation business at his Orange County home was ordered on April 11 to stop filing client tax returns.
But that could be the least of the headaches for some of Barrett’s customers, because he also was charged with 83 counts of tax preparation fraud and one count of tax evasion.
Barrett surrendered to authorities on Thursday morning and was arraigned by U.S. Magistrate Judge Paul E. Davison in federal court in White Plains.
He files more than 700 tax returns a year, but about two dozen clients allegedly got special treatment.
He fabricated or inflated deductions by nearly $2.4 million, according to the indictment, for the 2012 to 2015 tax years. He allegedly falsified his own returns by more than $429,000, over four years, including failure to report $305,000 in client fees.
The indictment describes a variety of techniques that lowered clients’ taxes.
For instance, he allegedly designated the wrong filing statuses – married, single, married separate or head of household – to qualify for lower tax rates or for tax credits.
Schedule A forms, the government claims, falsified deductions for gifts to charity, job-related expenses and state and local taxes.
Schedule C forms misreported business receipts, expenses and profits or losses for sole proprietorships.
Schedule E forms inflated rental real estate losses.
The indictment identifies the clients by initials. MC’s tax return for 2012, for example, allegedly fabricated or inflated deductions by $29,599 for rental losses, $8,005 for real estate taxes, $5,834 for unreimbursed employee expenses, and $4,754 for gifts to charity.
In all, MC’s write-offs were inflated by $158,536, according to the indictment, over the four tax years.
If found guilty, Barrett could be fined up to $250,000 for each charge and sentenced to three years in prison for each false tax return and five years for evading his own taxes.
Barrett pleaded not guilty and he was released from custody on a $100,000 personal recognizance bond.
U.S. Attorney Geoffrey S. Berman praised the work of the Internal Revenue Service criminal investigation division in a news release.
Assistant U.S. Attorney Margery Beth Feinzig is prosecuting the case. Michael K. Burke of Hodges Walsh & Burke of White Plains is representing Barrett.