A New Jersey tax preparer received an 18-month prison sentence Tuesday for willfully preparing fraudulent tax returns for clients. Kellar Covington, Jr., 62, was also ordered by U.S. District Court Judge Faith S. Hochberg to serve one year of supervised release and refrain from the tax preparation business for 10 years.
Covington owned and operated KCJ Financial Corporation and helped operate DFC Tax Pros, Inc., both located in Irvington. Covington admitted that he prepared false tax returns for clients by fabricating and inflating Schedule A itemized deductions, Schedule C expenses and Schedule E losses such as for gifts to charity, job expenses and real estate losses. Prosecutors estimate that he defrauded the IRS out of approximately $140,259.
Covington pleaded guilty in February to a one-count information charging him with aiding and assisting in the preparation of false tax returns (see N.J. Tax Preparer Pleads Guilty to Preparing Fraudulent Returns).
“Return preparer fraud is like a contagious disease, it affects not only the preparer, but the individuals who have filed false information with the Internal Revenue Service,” said Jonathan D. Larsen, Acting Special Agent in Charge of IRS-Criminal Investigation’s Newark Field Office. “It is our hope that today’s sentence sends the strong message that tampering with the integrity of our nation’s tax system will result in jail time.”