To close the year 2024, we bring to your attention a case on the news (NYTimes) a mind blowing case where a tax preparer through a network of franchises ATAX stole more than $145 million from the IRS.

Back in April 2024, the IRS make the case public and issued a press release (see link below). See some extracts from the IRS website:

U.S. Attorney Damian Williams said: “Rafael Alvarez was allegedly so prolific in falsifying his customers’ tax returns that he came to be known as ‘the Magician’ for his ability to make customers’ tax burden disappear. But, Alvarez’s sleight of hand was criminal tax fraud, a serious federal tax crime he was allegedly committing for over a decade, depriving the IRS of more than $100 million in tax revenue. Today’s charges, on Tax Day, should serve as an important reminder to tax professionals that when they try to cheat the public fisc they will face grave consequences.”

IRS CI Special Agent in Charge Thomas Fattorusso said: “While Alvarez may have been known as the ‘magician,’ he can’t say abracadabra and make these charges disappear. This one person is charged with creating a criminal enterprise that defrauded the government of more than $100 million. The evidence points to Alvarez’s alleged scheme to file tens of thousands of fraudulent tax returns, while his company, ATAX, grossed over $15 million in revenue in just three years. Today’s arrest was no magical illusion, and Alvarez now faces the reality of his actions.”

Note that Rafael Alvarez grew his business in the million in revenues (from NYTimes article: “…  From 2016 to 2019 alone, ATAX took in at least $15 million in gross revenue”, was recognized with awards (like the IFA Ronald E. Harrison Award) and received favorable press articles from magazines like Entrepreneur until the charges were brought forward.

Even if Rafael Alvarez has “… agreed to pay the I.R.S. $145 million in restitution and forfeit $11.84 million in fraudulent proceeds“, the IRS probably will not be able to recover the funds and will go after the taxpayers that used ATAX for tax preparation owing the IRS calculated liabilities, plus interests and penalties.

Remember keep the magic of the holidays at home with your family and friends, and not in your tax return!

Link IRS – April 2024 – Bronx tax preparer charged with filing tens of thousands of false tax returns causing over $100 million in fraudulent tax loss

Link NYTimes – December 2024 – Tax Preparer Known as ‘the Magician’ Bilked I.R.S. Out of $145 Million