A New York tax preparer known as “the Magician” has pleaded guilty to filing tens of thousands of false tax returns costing the government $145m in tax loses.
Rafael Alvarez perpetrated and oversaw one of the largest ever tax frauds by a return preparer, according to prosecutors in the southern district of New York.
According to prosecutors, the decade-long scheme involved tens of thousands of individual federal income tax returns that included false information designed to fraudulently reduce the individuals’ tax burden.
“Rafael Alvarez became known as ‘the Magician’ by his customers for his supposed ability to make their tax burden disappear,” said the acting US attorney Edward Kim.
“There was no magic to what Alvarez was doing – he was committing a serious federal crime by falsifying tens of thousands of tax returns and, in the process, depriving the IRS of $145m in tax revenue,” he added.
Alvarez pleaded guilty to charges of conspiracy to defraud the US and steal government funds and one count of aiding and assisting in the preparation of a false and fraudulent US individual income tax return.
As part of the Alvarez’ guilty plea, he agreed to pay the Internal Revenue Service $145m in restitution and forfeit over $11.84m in fraudulent proceeds. He will be sentenced in April to a maximum term of eight years under federal sentencing guidelines.
The company he owned and ran, ATAX New York, was a high-volume tax preparation company located in the Bronx that prepared approximately 90,000 federal income tax returns for its customers over a 10 year period from 2010.
Included in the false information he provided the government, were bogus itemized tax deductions, made-up capital losses, phony business expenses and fraudulent tax credits designed to reduce customer’s tax liability and maximise tax refunds.
Alvarez was so consistent at falsifying customer’s tax returns that he became known as “the Magician”.
But that’s not how the government came to see his activities.
When Alvarez was charged on 15 April – tax day – this year, IRS special agent in charge Thomas Fattorusso said that while Alvarez was known as the magician, “he can’t say abracadabra and make these charges disappear”, and that his arrest “was no magical illusion”.
