Tax Preparer’s Fraudulent Scheme Results in $1.3 Million Loss for IRS, Leads to Prison Sentence

A Chicago-area tax preparer has been sentenced to one year and one day in prison for orchestrating a scheme that resulted in the filing of over 900 false income tax returns, causing a loss of $1.3 million to the Internal Revenue Service (IRS).

Vervia Watts, a resident of Lansing, Illinois, operated a tax preparation business where she prepared and filed fraudulent income tax returns for her clients between January 2017 and June 2023. Watts falsely claimed education expenses and business income on the returns to secure larger refunds, receiving at least $300 for each return she prepared.

The IRS paid out approximately $1.3 million in fraudulent refunds as a result of Watts’ actions. In addition to her prison sentence, she has been ordered to serve one year of supervised release. This case serves as a warning to tax preparers and individuals engaging in fraudulent activities, highlighting the severe consequences of such actions.

The investigation was conducted by the IRS Criminal Investigation, and the case was prosecuted by Trial Attorneys Meredith Havekost and Regina Jeon of the Tax Division. Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division announced the sentencing.

This case underscores the importance of choosing a reputable and honest tax preparer. Small business owners and individuals should be cautious and conduct thorough research before selecting a tax professional to ensure compliance with tax laws and regulations.