Tri-Cities tax preparer bilked $195,000 from IRS with inflated returns for clients

A Richland tax preparer took more than $195,000 from the Internal Revenue Service by filing false and fraudulent claims for clients.

Jonathon F. Schumann, 49, was sentenced this month in Richland’s U.S. District Court to six months in federal prison, along with one year on court supervision.

He also was ordered by Judge Sal Mendoza Jr. to pay full restitution to the IRS, with the first payment of $50,000 due no later than March 25.

The sentencing followed Schumann’s previous plea to three counts of aiding and assisting in the preparation and filing of false income tax returns.

Schumann originally was indicted by a federal grand jury in December 2019 on 16 counts.

He had faced up to three years behind bars if convicted on all the charges.

Schumann was the owner of J’s Income Tax. He lives in both Richland and Las Vegas.

‘Stopping this fraud’

“Schumann undermined the American tax system and the trust of taxpayers relying on his expertise,” said Joseph H. Harrington, the acting U.S. attorney for the Eastern District of Washington. “Tax preparers have a responsibility to legally and accurately prepare tax returns on behalf of their clients.”

In a news release, Harrington added that his office works closely with IRS criminal investigators “to protect the law-abiding American public and the treasury by stopping this fraud.”

It was disclosed in documents and during court hearings that Schumann prepared and filed individual tax returns for clients who claimed fraudulent and inflated returns for the 2015 and 2016 tax years.

Those fake itemized deductions included charitable contributions, personal property and sales taxes and employee business expenses that had not been reimbursed.

Employee business expenses cover everything from vehicle and travel expenses to meals and entertainment.

By including these false items, Schumann’s clients received tax refunds from the IRS in excess of what they were entitled to receive, the news release said.

Schumann argued at sentencing that he believed the overall tax loss was about $45,600 instead of $195,200.

Sole business owner

The clients were in the Tri-Cities and Nevada, and some may have been involved in the fraud both years, according to Schumann’s indictment.

The grand jury was given the full identity of each client, though they’re only referred to in the public document by their initials. It shows initials of four different people.

Schumann charged fees for preparing the 1040 and itemized deduction forms, and normally deducted his bill from the clients’ inflated refunds.

He was the sole proprietor of the now-closed J’s Income Tax, which once operated out of a West Gage Boulevard office, in addition to his Richland home, according to the Washington state Department of Revenue.

In March 2003, Schumann applied for and was assigned an identification number by the Internal Revenue Service to use the electronic filing program, or e-file.

At the same time, he was approved by the agency to become an electronic return originator — an individual or entity authorized to submit electronic returns on behalf of clients for a preparation or processing fee.

Then, starting in January 2011, the IRS required all paid federal tax return preparers to have an identification number specifically for that purpose. Schumann applied for his in October 2012, according to the indictment.

“While most return preparers provide excellent service, Mr. Schumann filed false and fraudulent returns that defrauded his clients, the tax-paying public, and the government,” said Steven M. Slazinik, the IRS Criminal Investigation’s acting special agent in charge.

“Return preparer fraud continues to be a priority for IRS Criminal Investigation,” he added, “and if you suspect fraudulent activity from your return preparer, you can report it at www.irs.gov/individuals/how-do-you-report-suspected-tax-fraud-activity.”