False filings of IRS returns send professional Tustin tax preparer to prison: Feds demand $1 million deductions back

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The former owner of a Tustin income tax preparation business was sentenced Thursday to a year in prison for preparing and filing fraudulent federal income tax returns claiming false deductions for clients.

Thomas P. Butcher, 62, of Rancho Santa Margarita, was also ordered by U.S. District Judge John A. Kronstadt to pay $197,549 in restitution to the Internal Revenue Service, according to the U.S. Attorney’s Office.

Butcher, ex-owner of First Quality Tax Services, pleaded guilty in January in Los Angeles to two federal counts of aiding and abetting in the preparation of a false income tax return.

According to court documents, Butcher prepared and filed tax returns for the years 2009 through 2011 that claimed false credits and deductions that his clients were not entitled to receive.

Butcher “inflated or completely fabricated various itemized deductions on his clients’ Schedules A, particularly those involving gifts to charity and alleged job expenses,” prosecutors wrote in a sentencing memorandum.

During the course of the scheme, Butcher prepared and filed with the IRS hundreds of false federal income tax returns that resulted in tax losses to the government of at least $1 million.

The IRS was able to recoup much of that money through audits of Butcher’s clients, who “are victims of his scheme, as many of them underwent lengthy and costly IRS audits to not only pay back the refund to which they were not entitled, but interest and additional penalties,” according to the memo.

Butcher was ordered to begin serving his federal prison sentence by July 25.

–City News Service