A Shellsburg tax preparer who admitted filing false tax returns on behalf of clients who were unaware of the changes he made, then diverting parts of tax refunds to his personal bank accounts, has been sentenced to 21 months in federal prison and ordered to repay the government more than $50,000.
The IRS did not disclose how or when the investigation of Keith Rath, 52, began.
“That information is not contained in any filed, public record,” said IRS Criminal Investigative Public Relations Officer John Nunez.
In general, says Nunez, the official spokesman for the St. Louis IRS Regional CI office, the agency receives leads on investigations from a variety of sources, such as IRS processing campuses or service centers, IRS audits or collection activities, from taxpayers providing information, and from law enforcement sources.
In March, the U.S. Attorney’s office charged Rath with eight counts of preparing and presenting fraudulent tax returns. The charges were outlined in an Indictment unsealed on March 22, 2013, in United States District Court in Cedar Rapids. The Indictment alleges that, between about January 2008 and March 2010, Rath prepared and filed eight fraudulent tax returns.
The clients whose returns were falsified were unaware of the crime.
“Typically, clients are witnesses in the investigation who verify the accuracy of the information contained on the returns. If the clients did not receive money they were not entitled to from the false tax return, then the clients would have no additional liability. Mr. Rath would be responsible for the refunds he received from the false returns. At sentencing, the Judge ordered restitution in the amount of $52,418,” said Nunez.
On May 1, Rath pleaded guilty to one count of aiding and assisting the preparation and filing of a false and fraudulent tax return, while also admitting to falsifying several other returns.
In a plea agreement, Rath, who owned and operated a tax return preparation business, as well as a sports officiating business, admitted he prepared and filed a false tax return on behalf of a client, fraudulently increasing the amount of the client’s tax return. Rath also admitted he arranged to have the fraudulent portion of the client’s tax return deposited directly into Rath’s bank account. Rath admitted he did this without the client’s knowledge. Finally, Rath admitted he filed multiple other similarly false tax returns between 2008 and 2010.
“Knowingly falsifying documents that are filed with the IRS is a crime,” said Sybil Smith, Special Agent in Charge of IRS Criminal Investigation. “Tax return preparers have a duty to prepare returns that comply with the law and are accurate.”
Rath was sentenced in Cedar Rapids by United States District Court Chief Judge Linda R. Reade. Rath was sentenced to twenty-one months’ imprisonment to be followed by one year of supervised release. A special assessment of $100 was imposed and he was ordered to make $52,418 in restitution. There is no parole in the federal system.
Rath was released on conditions previously set by the United States District Court and is to surrender to the United States Marshal on August 22, 2013.
The IRS and IRS CI have web pages devoted to selecting a tax preparer who will follow the law:
The Rath case was prosecuted by Assistant United States Attorney Anthony Morfitt and was investigated by the Internal Revenue Service Criminal Investigation Division.
Court file information is available at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. The case file number is 13-12.
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