Fourth Circuit upholds return preparer conviction in RAL wire fraud case.

• Author: Nevius, Alistair M.
• Position: Refund anticipation loan

The Fourth Circuit has upheld the conviction of a Maryland tax return preparer for preparing false tax returns and for wire fraud, where the preparer used interstate wire communications to secure refund anticipation loans (RALs) for his customers (Mehta, No. 08-4489 (4th Cir. 2/5/10)). The court held that minor errors in the indictment and in the way the lower court estimated the total tax loss were harmless.

The defendant, Jiten Mehta, was a tax return preparer who, according to the testimony of six of his customers and two undercover IRS agents, fabricated and/or exaggerated itemized deductions on his clients' tax returns. Mehta participated in a RAL program through a participating bank and his tax preparation software vendor. In the course of transmitting taxpayers' returns to the bank, receiving authorization for the RALs from the bank, and receiving his fees from the bank, the defendant made use of interstate wire communications.

As a result of the fabricated Schedule A deductions, Mehta was convicted in a U.S. district court in Maryland on 16 counts of aiding and assisting in the preparation of a false tax return under Sec. 7206. He was also convicted of 17 counts of wire fraud under 18 U.S.C. Section 1343. The conviction for wire fraud required the government to prove that the defendant (1) knowingly and willfully participated in a scheme to defraud (i.e., the preparation of false tax returns) and (2) used interstate wire communications in furtherance of that scheme.

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