This Tax Preparer Should Have Prepared for Her Jail Sentence
A Word to the Wise About Being Honest on Your Tax Return. In April, 2011 Sharolyn L. Yarbrough, a 34 year old resident of Baltimore, and a former tax preparer/owner of Sly’s Financial Services plead guilty to assisting in the preparation of false tax returns and filing false tax returns from 2006 through 2009.
From 2003 to 2004, Ms. Yarborough worked as a part time tax preparer for a national tax preparation service. In 2004, without any additional financial or tax experience, she opened Sly’s Financial Services (an interesting name in light of her conviction).
According to the plea agreement, Ms. Yarborough obtained tax returns for 99.5% of her customers. So how did she do it? By fabricating and inflating deductions and credits to reduce clients’ tax liabilities and generate refunds for them. She used several different techniques to fraudulently reduce the tax and create refunds, including overstating charitable contributions, and claiming false or excess business expenses.
You might ask how much that sort of thing could save those customers. Well, the estimated tax loss as a result of the scheme was over $3.4 million from 2004 through the Spring of 2010. The period involved in the criminal enterprise was limited to the period from 2006 to 2009 and included an estimated $2.5 million in lost tax revenue.
Yarborough also admitted to falsifying her own tax returns from 2006 through 2009 resulting in an understatement of tax in the amount of $286,110.
The law finally caught up to her however and now Yarbrough faces a maximum penalty of three years in prison on each of the five counts to which she pleaded guilty. The scheduled sentencing is set for August 12, 2011.
This story is a cautionary tale. If you cheat or help to cheat on your taxes or turn a blind eye when someone does it for you, like your tax preparer, then you are breaking the law too, facing the same penalty as Yarborough. So, make sure that when preparing your taxes, remember that the truth matters and you may get caught. In the audits I’ve done for my clients, I’ve seen fuzzy truth or outright lies come to haunt people, not only when in front of the auditor but also in clients’ dreams because they know they are taking a risk. If that’s you, think about coming clean,but first, come see me for help and advice.
Brian Geno is an attorney handling tax problem resolution cases before the IRS. He is also a member of the U.S. Tax Court. He handles collection problems and audits for individuals and small businesses.
