Opinion ID: 2756585
Heading Depth: 2
Heading Rank: 2

Heading: IRS Fraud Investigation: 2007-2009

Text: In December 2007, IRS agent Timothy Evans went to defendant Barber’s Brevard Street office to conduct a scheduled compliance check on KLB and KBA. When Evans called to set up an appointment and asked to speak with the owner, the receptionist transferred him to Barber. During the compliance check, Evans did not deal with anyone other than Barber. As part of the first compliance check, Evans reviewed 100 client files and noticed that 47 of the 100 returns reported a total of $287,000 in HSH income. HSH income, which is income earned from working in someone else’s home, is not very commonly reported. When Evans pointed this out, Barber stated that any income from self-employment should be reported as Schedule C income instead. Evans testified that reporting HSH income instead of the same amount of Schedule C income generates a much higher refund. During Evans’s two-day visit, defendant Barber gave his employees a list of clients and instructed them to clean their files of any documents (such as paycheck 6 Case: 13-13023 Date Filed: 12/02/2014 Page: 7 of 32 stubs and W-2s) that were inconsistent with the false information reported on the tax returns filed with the IRS. Evans’s review of the almost 1300 tax returns filed by Barber’s business in 2007 revealed several red flags. The 2007 returns reported almost $2.3 million in HSH income in round numbers such as $2500, $3500, $4500, $5500, $6500, and $7500, with many repeated amounts. Evans also noticed that some returns claimed different dependents each year for the same individual. The reported familial relationships, which included many nieces and nephews, were poorly documented and were of questionable eligibility. Yet other returns listed Barber’s P.O. Box instead of the client’s address. When Evans asked Barber why some of the returns listed his P.O. Box as the address, Barber explained that it was sound business practice to have refunds come back to him to ensure that he received his preparation fees from clients. After being fined after the IRS’s first compliance check, defendant Barber instructed Davis and Anthony to stop using false HSH income and instead use false Schedule C income. Later, Barber taught Davis and Anthony to report false Schedule C expenses as well as false income to make the returns appear more legitimate. In January 2009, Evans conducted a second, unannounced compliance check on KLB and KBA, during which he met with defendant Barber. This time, Evans 7 Case: 13-13023 Date Filed: 12/02/2014 Page: 8 of 32 did not see any suspicious HSH income but noticed that many returns listed unsupported Schedule C income. The files lacked any supporting documentation from the client of income earned from self-employment or expenses incurred to operate the purported business. During these compliance checks, Evans observed that Barber was in charge of the business and Barber admitted that he trained his tax preparers. After the second compliance check, Evans referred Barber to the IRS’s criminal investigations unit. On November 13, 2009, agents executed a search warrant at defendant Barber’s Brevard Street office. Agents seized around 55 boxes of client files and business records, as well as Barber’s individual and corporate tax returns.