A federal magistrate judge is considering whether a woman accused of filing more than $460,000 in fraudulent tax deductions should be allowed to continue filing tax returns while she is free on bond.
A grand jury indicted Linda Lopez, who operated Tax Premier Solutions, with nine counts of fraud and false statements on Feb. 15 and over the last two weeks her attorneys have been tangling with federal prosecutors about whether she should be able to continue filing returns during tax season.
Lopez is accused of filing a total of $460,359 in fraudulent deductions between 2016 and 2017, including what the government says are hard-to-obtain residential energy credits.
She has pleaded not guilty to the charges.
The indictment says Lopez owned and operated Premier Tax Solutions, which had an electronic filer identification number and that Lopez had a preparer tax identification number, which is how the business and Lopez submitted tax returns to the Internal Revenue Service, or IRS.
Prosecutors allege that Lopez trained, instructed and directed her employees to use those numbers to file false and fraudulent tax returns.
“Linda Lopez’s objective in preparing false and fraudulent tax returns and causing her employees to prepare false and fraudulent tax returns, was to generate business for Premier Tax Solutions by causing the IRS to issue inflated refunds to taxpayers,” the indictment stated.
Lopez is free on a $50,000 bond and one of the conditions of that bond is that she maintains employment. However, there is also a bond recommendation that states that Lopez needs to seek employment that is not related to preparing or filing tax returns for third parties.
Prosecutors have filed three briefs asking U.S. Magistrate Judge J. Scott Hacker to prohibit her from tax work. Lopez’s defense team has argued she should be able to continue the work to meet the condition of her bond that she maintain employment.
“In addition, the Government requests that the Court make clear that the condition not only precludes Defendant from preparing and filing tax returns herself, but also precludes Defendant from engaging in any tax preparation work whatsoever, including the use of her business, Premier Tax Solutions, and employees, to prepare and file tax returns with the IRS,” one of the briefs stated.
That document, which was filed on March 2, expands on the allegations against Lopez, specifically concerning residential energy credits.
That is a credit a tax filer can obtain if they purchased alternative energy products for their home, such as solar panels.
At her detention hearing, IRS special agent Carlos Quevedo testified that about 1% of tax returns nationally and in Texas claimed this credit while 56% to 58% of tax returns filed by Premier Tax Solutions from 2017 to 2018 claimed this credit, according to the brief.
“The alarmingly large percentage of returns claiming the Residential Energy Credit corroborates the Employee’s account of Defendant Lopez training her employees to falsely claim the tax credit to fraudulently inflate taxpayer refunds,” the brief stated. “It also illustrates the enormous tax harm to the community posed by (the defendant’s) fraud.
“(Special agent) Quevedo testified that in tax years 2017-2018, the total dollar amount of Residential Energy Credits claimed on tax returns prepared by Premier Tax Solutions was approximately $7.5 Million.”
Another one of the government’s briefs also alleges that the IRS has taken steps to administratively revoke Tax Premier Solutions’ electronic filer identification number.
“The government claims that this administrative revocation mooted much of the dispute by stopping Ms. Lopez’s business from filing tax returns (the same relief it sought from this Court), and it claims that the IRS’s action against Ms. Lopez’s business supports this Court stopping Ms. Lopez personally from working,” Lopez’s attorneys said in a response to the government.
Her attorneys say this is misleading and that Lopez can still prepare and file tax returns, but only under the supervision of someone else who holds an electronic filer identification number.
“This supervision reduces any alleged community risk that the government claims Ms. Lopez poses,” the response stated. “Denying Ms. Lopez the right to work in her profession under these changed circumstances is even more unjust than it was before the revocation.
“And denying her that right to work still impedes her ability to maintain employment, which is a term of pre-trial release this Court has already imposed upon her.”
Lopez’s attorneys also say she should be allowed to file tax returns under supervision because she still holds a preparer tax identification number.
“As such, the following statements by the government are — on their face — materially false and misleading — and intended to lead the Court to believe that the (electronic filer identification number) revocation impacted Ms. Lopez’s ability to continue to work as a tax preparer,” the response stated.
Federal prosecutors in a reply to the response, described it as being “full of sound and fury,” but without “legitimate basis” to not impose the condition prohibiting her from filing tax returns while on pre-trial release.
Furthermore, prosecutors say Lopez has other work experience that would allow her to satisfy the bond condition requiring her to maintain employment.
“To the contrary, Defendant has extensive education and training beyond preparation of tax returns,” the government stated.
For instance, prosecutors say Lopez has extensive experience in medical billing as a clerk at two different medical practices over a combined period of seven years.
As of early Friday afternoon, the judge had not yet made a ruling.
