A Nashville woman pleaded guilty Monday in U.S. District Court to helping Middle Tennesseans claim more than $100,000 in fraudulent refunds from the Internal Revenue Service.
Nechelle Scales admitted that she participated in a scheme where she created false W-2 Forms purporting wages and tax withholding and then helped them file fraudulent IRS documents.
Federal agents claim she helped at least 11 people between 2003-2005.
The W-2 Forms were fictitious because the participants did not work at the businesses and earn the income shown on the forms.
During the plea hearing, Scales admitted that she knew the forms would be used to file false income tax returns and in some cases she drove the individuals to the tax preparation business to have the return prepared or to pick up their refund check. The checks were subsequently cashed and the proceeds were split between the individual and Scales.
Scales also admitted that she instructed some of the participants to claim false dependants and provided them with Social Security numbers for the dependants in order to increase the amount of their refunds.
“Disreputable tax preparers who prey on vulnerable individuals by promising unreasonable and illegal tax returns on income are doing a disservice to honest and law abiding taxpayers and their illegal activities will be prosecuted diligently by the United States Attorney’s Office,” said U.S. Attorney Ed Yarbrough.
Scales, who was arrested on a federal information Aug. 13, pleaded guilty to one count of aiding and assisting in the preparation of a false tax return. She faces a maximum penalty of 3 years in prison and a fine of $250,000 when she is sentenced on April 2, 2010.