Legal Issues

When the Tax Guy's a Tax Cheat

When the Tax Guy's a Tax Cheat

The owner of two separate tax preparation companies will be spending the next four-and-a-half years in jail after he was caught misusing client information to steal from the federal government. Damian O. Barrett pled guilty to mail fraud, filing a false tax return, and aggravated identity theft. Once his 54-month term in federal prison is behind him, he'll face another three years of supervision. He will also pay 11 state departments of revenue $234,000 in restitution and more than $74,000 to the IRS.

According to a press release issued by the Internal Revenue Service, Mr. Barrett, a resident of Homestead, Florida, legitimately operated Max Tax Experts, LLC, the first of his two tax preparation companies, preparing and submitting returns on behalf of clients. But between January 2015 and December 2018 he filed 745 false tax returns to 19 different state taxing authorities under the auspices of his other company, Winngate Tax Services. Many of the false returns he submitted and refunds he requested used the names, social security numbers, and employer identification numbers that he'd collected from his clients, as well as from other victims. He also created phony bank accounts into which he requested the false refunds be deposited.

According to IRS Criminal Investigation (IRS:CI) Special Agent in Charge Bret Kressin, "Mr. Barrett used his specialized knowledge as a tax preparer to obtain false refunds at the cost of honest taxpayers all over the United States. Today's sentence is a victory for those of us who have been victims of a sophisticated tax refund scheme. IRS:CI continues to prioritize investigating individuals who diminish the integrity of our tax systems to hold them accountable for their fraud."

Mr. Barrett's misuse of others' information to submit fraudulent tax returns was ambitious: the IRS calculates that he attempted to collect almost $900,000 and was successful enough to have received monies totaling $234,000. Erik Asphaug, Acting U.S. Attorney for the District of Oregon was particularly grateful that aggressive legal action was pursued, as Barrett submitted 348 tax returns worth more than $322,000 in his state. He was successful enough to have received more than $130,000, leading Asphaug to say, “We applaud the IRS's effort to hold Mr. Barrett accountable for his crimes."

Barrett's fraud was not limited to impersonating innocent taxpayers. He also failed to report more than $21,000 of his own income in 2016 and did not file a personal income tax return in 2018. Those two acts alone created a tax loss for the government of almost $75,000.

While the IRS is pursuing tax fraud as diligently as it can, taxpayers should take care when choosing a tax preparation service company.

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Steward Financial

Steward Financial

Jon Osborn is a tax preparer based in San Dimas, California. His company, Steward Financial Services, offers a broad range of tax preparation, accounting and business consulting for small businesses. He loves to work with clients who are looking for answers to complex tax and business planning issues. He has owned several small businesses and worked with over one hundred small business owners. He helps his individual and business tax clients find the best ways to spend their money in order to minimize IRS tax. Small businesses looking to grow, sell or just increase cash flow are one of Jon's specialties.

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