A federal judge has sentenced two tax preparers to a combined total of 66 months in federal prison for defrauding the Internal Revenue Service out of more than $3.3 million.
Valencia Janee Mack, 40, and her former husband, Rodney Lamond Bowman, 47, both pleaded guilty in the fall of 2021 to conspiracy to defraud the United States, according to an announcement made by U.S. Attorney for the Northern District of Texas Chad E. Meacham on May 26.
Court documents show Mack owned and operated Phase U.S. Tax Services from January 2015 to April 2019. During this period, she and Bowman filed several fraudulent tax returns with the IRS.
Prosecutors added that the fraudulent tax refunds filed by the couple reported false Schedule C losses and Schedule A itemized deductions with the intention of making the IRS pay fraudulent refunds.
Prosecutors revealed that the false Schedule Cs showed fake losses from travel business Phase 4 Global and PlanNet. The losses were intended to reduce the couple’s clients’ total income, which entitled them to larger refunds from the IRS.
Authorities said that company officials with Phase 4 Global and PlanNet — both real businesses based in Decatur, Alabama, and Atlanta, Georgia, respectively — were not aware that Mack had falsely claimed business expenses associated with their companies on the couple’s client’s tax returns. Investigations also showed that none of the couple’s clients were legitimate contractors, employees, or franchises of the two businesses.
Court records show that Mack and Bowman hid the false Schedule C losses included in their clients’ tax returns filings by excluding relevant pages in the hard copy of the tax returns paper they gave to their clients.
Prosecutors claimed that Mack and Bowman gave fraudulent mileage logs and other documents that appeared to substantiate the false business expenses in the fraudulent Schedule Cs to clients who were being audited by the IRS.
Mack further admitted to fraudulently filling her 2014 personal tax return without reporting any income or expenses from Phase U.S. Tax Services, even though she earned income from the businesses, according to court documents. Mack also admitted that she did not file her personal tax return from 2015 through 2018.
Prosecutors say the couple shared the benefits of their fraudulent tax returns by splitting the preparation fees the IRS paid into the Phase U.S. Tax Services business account.
U.S. District Judge Jane J. Boyle sentenced Mack to 30 months in federal prison on Thursday, May 19. The judge also sentenced Bowman on May 19 to 36 months in federal prison, with the couple ordered to pay $210,442 in restitution.
In a statement, Christopher J. Altemus, Jr., special agent in charge of the IRS Criminal Investigation, Dallas Field Office, said he hopes the couple’s sentencing will send a strong message that tampering with the integrity of the country’s tax system will result in jail time for perpetrators.
“Return preparer fraud is like a contagious disease. It affects not only the preparer, but their own clients and the tax-paying public,” said Altemus. “Ms. Mack and Mr. Bowman wreaked havoc on our nation’s tax system and, as a result, will serve jail time.”
The IRS Criminal Investigation’s Dallas Field Office investigated the tax fraud while Assistant U.S. Attorney Douglas Brasher prosecuted the case.