A New Jersey tax preparer has been arrested over alleged fraudulent claims for COVID-19-related employment tax credits. Leon Haynes, of Teaneck, New Jersey, allegedly sought over $124 million from the IRS by filing over 1,000 fraudulent tax returns.

During the pandemic, Congress authorized an employee retention tax credit known as the “employee retention credit” (ERC) to help small businesses reduce the employment tax they owed to the IRS. Another credit was also authorized to compensate businesses for wages paid to employees who were unable to work due to COVID-19, known as the “paid sick and family leave credit.”

According to court documents, Haynes allegedly exploited these programs designed to aid small businesses severely impacted by the pandemic. From November 2020 to May 2023, acting as a tax preparer, Haynes is said to have prepared and submitted approximately 1,387 false forms to the IRS claiming COVID-related tax credits on behalf of himself and his clients.

The complaint alleges that Haynes told his clients that the government was distributing COVID-relief money for businesses and that they were eligible simply because they operated a business. Without consulting with his clients, Haynes then allegedly submitted forms to the IRS on behalf of their businesses that grossly overstated the number of employees and the amount of wages paid.

Haynes allegedly submitted similarly false forms for three of his own companies. Based on these misrepresentations, Haynes’ conduct allegedly sought approximately $124,751,995 in tax refunds on behalf of his companies and numerous other businesses in his clients’ names.

As a result, the IRS allegedly mailed Haynes multiple tax refund checks totaling $1,007,966 for his own companies. In total, the IRS allegedly disbursed $31.6 million in refunds to Haynes’ clients and himself based on the false tax forms that Haynes submitted. The complaint also alleges that Haynes charged his clients a fee of up to 15% of the refund they received.

If convicted, Haynes faces a maximum penalty of three years in prison for each count of aiding and assisting in the preparation of a false return and 20 years in prison for mail fraud.

The case underscores the need for small businesses to exercise due diligence in their dealings with tax preparers, particularly during periods of emergency relief, to ensure that all claims and filings are legal and valid.

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This article, “New Jersey Tax Preparer Arrested for Alleged Fraudulent Claims of Over $124 Million” was first published on Small Business Trends

Source: Small Business Trends

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