Taxes Two-Step

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When it comes to taxes, don’t mess with Texas—or Virginia, as it turns out. An article in the Richmond Times-Dispatch tells the story of a tax professional who filed fraudulent refund claims while managing the Northern Virginia office of a tax services firm headquartered in Dallas, netting a total of $20 million from both states. (That’s quite a dance.)

Although the Virginia man managed a number of employees, the article reports that he admitted to acting alone in claiming inflated overpayments of state sales and use taxes in client transactions, for which he pocketed $350,000 in bonus payments. (Cha Cha ching!) Meanwhile, the three-year scheme swiped $1 million from Texas and $19 million from Virginia coffers.The scammer’s clients were not implicated in the crimes—his elaborate cover-up reportedly involved the use of computer programs to falsify invoices and lying to his employer when initially confronted about problems. (I bet he’s good at the Chicken Dance, too.) The tax firm incurred a loss of $1.4 million resulting from a lengthy internal investigation and repayment of funds to Texas.

But it was the fancy footwork that earned this hustler a sentence of 71 months in prison and an order to pay back $20.4 million to the states and his former firm. (He won’t be footloose and fancy free for almost six years.) The judge cited the complexity of the crime, carried out by someone in a position of trust, when ruling that a punishment at the top of federal sentencing guidelines might help deter others from following in this criminal’s missteps.

The fraudster’s tax firm incurred a loss of $1.4 million resulting from a lengthy internal investigation and repayment of funds to Texas. In such a high-volume, complex field of tax preparation, companies and revenue agencies should be able to rely on trusted professionals to toe the line of the highest ethical standards, or make them face the music.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”N. Va. man sentenced in fraud that netted $20 million from VA., Texas,” written by Frank Green and published by the Richmond Times-Dispatch on December 1, 2015.

An Alexandria man who bilked the states of Virginia and Texas out of $20 million was sentenced in federal court in Richmond on Tuesday to almost six years in prison.

Sean M. Weaver, 33, who worked for the Dallas-based Ryan LLC’s Transaction Tax Practice Group, pleaded guilty in August to charges of mail fraud and money laundering.

Weaver managed 10 to 15 employees in the firm’s Northern Virginia office and was responsible for identifying client transactions that resulted in sales and use tax overpayments and then submitting claims to the state governments for refunds.

He admitted he acted alone and filed fraudulent claims that resulted in $1 million in refunds from Texas and $19 million in Virginia.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.