Not Your Average Tax Fraud Prosecution

For many years, the IRS has routinely prosecuted tax preparers who prepare false tax returns to generate large refunds for their customers. Last week, a defendant in a highly unusual tax return preparation case pleaded guilty in federal court in Massachusetts.  According to the criminal indictment, Mikalai Mardakhayeu, a Belarusian national and his co-conspirators offered free on-line tax preparation services to low income taxpayers.  They then stole over $400,000 of their clients’ refunds by instructing the IRS to wire the funds into bank accounts controlled by Mardakhayeu from his home on Nantucket.  Sentencing in the case is scheduled for April, 2011.

This case illustrates how tax return preparation schemes are evolving and becoming more sophisticated as e-filing becomes more prevalent.

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