Opinion ID: 4562361
Heading Depth: 2
Heading Rank: 2

Heading: Tax Returns Listing Different Tax Preparers

Text: Hairston alleges that, as to nine of the twenty-five tax returns forming the basis of the charges of assisting in preparation of fraudulent tax returns, he merely served in an administrative role as an Electronic Return Originator (“ERO”) who submits prepared electronic tax returns to the IRS. Hairston alleges that the preparers of those tax returns were four of his employees, and that he did not review the forms before submitting them to the IRS. Hairston contends that there was thus insufficient evidence to sustain the convictions as to nine counts—Counts 2–4, 6–7, 12, 20, 25, and 26—because he did not personally prepare those tax returns. The function of an Electronic Return Originator is described in United States v. Searan as follows: An Electronic Return Originator (“ERO”) enters a taxpayer’s data into a commercially available computer software program, then electronically transmits the information via modem to the IRS for processing as a tax return. When the IRS receives the information, it conducts a series of verifications to check for mathematical errors and ascertain whether the social security numbers correspond to those in IRS records. Upon completion of this process, the IRS sends an electronic message back to the ERO reporting that it has accepted the return. The acknowledgment indicates only that the return has successfully completed the initial screening process; it does not state whether the deductions taken on the return are allowable or otherwise appropriate. According to IRS guidelines, the taxpayer must verify and sign IRS Form 8453 after the return has been prepared but before the ERO transmits it electronically. Form 8453 contains a summary of figures on the return and a statement authorizing the ERO to file the return electronically on the taxpayer’s behalf. The taxpayer must be given a copy of the prepared return at the time of signature, as well as a copy of the signed Form 8453 upon its completion. 259 F.3d 434, 438 (6th Cir. 2001). Hairston alleges that he served as a mere ERO, and that his employees were the preparers of the nine tax returns in connection with which he challenges his conviction on this basis. Internal Revenue Code defines “tax return preparer” in 26 U.S.C. § 7701(36): (A) In general.—The term “tax return preparer” means any person who prepares for compensation, or who employs one or more persons to prepare for compensation, 4 No. 19-1526, United States v. Hairston any return of tax imposed by this title or any claim for refund of tax imposed by this title. For purposes of the preceding sentence, the preparation of a substantial portion of a return or claim for refund shall be treated as if it were the preparation of such return or claim for refund. (B) Exceptions.—A person shall not be a “tax return preparer” merely because such person— (i) furnishes typing, reproducing, or other mechanical assistance, (ii) prepares a return or claim for refund of the employer (or of an officer or employee of the employer) by whom he is regularly and continuously employed, (iii) prepares as a fiduciary a return or claim for refund for any person, or (iv) prepares a claim for refund for a taxpayer in response to any notice of deficiency issued to such taxpayer or in response to any waiver of restriction after the commencement of an audit of such taxpayer or another taxpayer if a determination in such audit of such other taxpayer directly or indirectly affects the tax liability of such taxpayer. 26 U.S.C. § 7701(36). Even though Hairston’s employees were named as tax preparers on the documentation pertinent to nine tax returns, the taxpayers on whose behalf Hairston’s business prepared fraudulent tax returns testified that they were not familiar with the individuals listed as preparers on their returns. Those clients testified that they were dealing with Hairston and not with his employees. The clients also did not witness who filled out their tax forms. Only one of them, Rosetta Young, testified that someone other than Hairston, namely Hairston’s employees Damon Riesgo and another female employee, prepared her 2012 and 2013 tax returns, respectively. But client Young also testified at Hairston’s trial that Riesgo had sought and received Hairston’s approval for her tax return. For example, Young testified: Q. Now, can you see where that says Damon Riesgo prepared this return? A. Yes. I see that. I see that. Q. Is that accurate? Is that true? A. Yes. Because when I went to Gary, he did let another guy—you know, he told him to go ahead and help me fill out my form and he—and he—the guy did do it. Q. And then what did Gary do in relation to this form? A. Well, after the guy filled it out and then the guy took it back there for Gary to okay it, then Gary okayed it and then that was it. Then I left. 5 No. 19-1526, United States v. Hairston Q. How do you know that Gary okayed it? A. Because I heard him in the back say, “Yes, that’s okay,” and he had to sign it. Q. So you believe that Gary looked at this return and went over it with Mr. Riesgo? A. I guess that he went in the back with him. Hairston was convicted for violation of 26 U.S.C. § 7206(2), which states in relevant parts: Any person who— … (2) … Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; … shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution. 26 U.S.C. § 7206. Hairston does not deny that, as an ERO, he presented to the IRS twenty-five false tax returns, including the nine returns at issue here. Instead, he alleges that his function as an ERO was merely administrative. But aside from his function as ERO, Hairston could have also been reasonably found guilty of assisting in the preparation of false tax returns. The statute does not require that Hairston personally prepare the fraudulent tax returns and supporting documentation to be liable under 26 U.S.C. § 7206(2). The elements of the crime of violating § 7206(2) are “1) willfully aiding, assisting, procuring, counseling, advising, or causing, 2) the preparation or presentation of a federal income tax return, 3) that contains a statement of any material matter known by the defendant to be false.” Searan, 259 F.3d at 441 (citing United States v. Sassak, 881 F.2d 276, 278 (6th Cir. 1989)). The “language of § 7206(2) effectively incorporates into this statute the theory behind accomplice liability.” Id. at 443. A defendant may 6 No. 19-1526, United States v. Hairston be convicted under § 7206 even if his involvement in the preparation of the false returns was minimal. See id. at 447. In Searan, a mother and a son ran a tax-preparation business. Id. at 438. The evidence showed that the mother had prepared and signed most of the returns, yet this court upheld the son’s conviction under § 7206 because “he actively participated . . . by assuring victims of his and his mother’s competency to file tax returns” containing illegitimate deductions. Id. at 445. Here, the clients met with Hairston to discuss the preparation of their tax returns, or else they relied on Hairston, who operated the business of tax-return preparation, when they brought the documents to his office and signed engagement letters. In United States v. Goosby, Goosby operated a tax-preparation business from his home. 523 F.3d 632, 635 (6th Cir. 2008). Goosby’s clients relied on him to prepare their tax returns after meeting in person with Goosby or with his employees. Id. at 635–36. Goosby’s employees, who did not have tax-preparation training and relied on Goosby to determine the deductibility of certain items, entered data into a computer program that filled out the clients’ tax returns. Id. at 636. Goosby testified at trial and denied that he was a tax preparer except for one amended tax return. Id. This court affirmed Goosby’s conviction on thirty counts of willfully assisting in the preparation and presentation of false or fraudulent income tax returns, explaining that “the similarity in the type of false deductions claimed on most of the tax returns [was] strong circumstantial evidence that the defendant willfully submitted tax returns containing false statements.” Id. at 637. Applying the standard of “viewing the evidence in the light most favorable to the government,” this court held that “the jury could find beyond a reasonable doubt that Goosby was responsible for submitting the tax returns with numerous false deductions and that his actions were willful.” Ibid. 7 No. 19-1526, United States v. Hairston As was the case in Goosby, the false tax returns prepared for Hairston’s clients over the years show a pattern of similar false income and expense items, done with the result of maximizing EITC refunds. Even if Hairston did not personally prepare some of those returns, he prepared the initial-year tax returns for most of those clients and often also their subsequent returns. He prepared most of the annual tax returns for many of the clients as to whom he denies having prepared a particular tax return. In one instance, Hairston acknowledged on direct examination that although the tax return listed Marvin Wilkins as the tax preparer, it was, in fact, Hairston who had prepared the return. While client Rosetta Young confirmed that her two fraudulent tax returns (Counts 25–26) were prepared by Hairston’s employees, those returns show a similar pattern of false income and expense items for nonexistent business and wages as the other twenty-three tax returns, each maximizing the EITC refund and prepared by Hairston’s tax-preparation business. Hairston alleges that the prosecution did not have sufficient evidence that it was he who assisted in the preparation of the nine tax returns in question, because various employees of his business were listed on the tax returns as preparers. He cites no authority to support his claim that a witness’s testimony cannot overcome conflicting record evidence. But this court “do[es] not weigh the evidence, assess the credibility of the witnesses, or substitute [its] judgment for that of the jury” in assessing the sufficiency of the evidence. United States v. Jackson, 55 F.3d 1219, 1225 (6th Cir. 1995) (quoting United States v. Wright, 16 F.3d 1429, 1440 (6th Cir. 1994)). Rather, we “review[] the evidence in a light most favorable to the prosecution, giving the prosecution the benefit of all reasonable inferences from the testimony.” United States v. McAuliffe, 490 F.3d 526, 537 (6th Cir. 2007). Here, the record evidence consists of multiple tax returns and supporting documentation signed by the clients that listed individuals other than Hairston as tax preparers. In one instance, 8 No. 19-1526, United States v. Hairston Hairston admitted that, although Marvin Wilkins was listed as the tax preparer on the tax return at issue in Count 14, it had been, in fact, Hairston who prepared the return. The clients, except for one, Rosetta Young, testified that they were not familiar with the individuals listed on their returns as tax preparers and that it was their understanding that Hairston was preparing the tax returns. The paperwork was prepared by Hairston’s business, which he had organized and had a duty to supervise and control, not by his clients, who merely provided some input and signed the forms, relying on Hairston or his employees to prepare and file their tax returns. Hairston then electronically transmitted the returns to the IRS, allegedly without reviewing them. Although there is no specific evidence that Hairston prepared or directly assisted in the preparation of the nine tax returns that listed his employees as the tax preparers, “[c]ircumstantial evidence alone is sufficient to sustain a conviction and such evidence need not remove every reasonable hypothesis except that of guilt.” United States v. Lowe, 795 F.3d 519, 522–23 (6th Cir. 2015). The jury found Hairston to be guilty of assisting in the preparation of all twenty-five false tax returns. Based on the record, while drawing “all reasonable inferences in support of the jury’s verdict,” United States v. Stewart, 729 F.3d 517, 526 (6th Cir. 2013), we hold that a “rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt” with regard to the nine contested tax returns. See United States v. Evans, 883 F.2d 496, 501 (6th Cir. 1989) (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)). We therefore affirm the district court’s judgment as to Counts 2–4, 6–7, 12, 20, 25–26.