Wichitan prepared false tax returns, claimed children from another country for credits

A Kansas woman has agreed to repay the Internal Revenue Service more than $100,000 after filing tax returns for clients that claimed as dependents children who were actually living abroad.

Sonia Hernandez-Smith admitted in U.S. District Court on Friday that she knowingly prepared federal income tax returns that falsely claimed tax credits.

The 41-year-old Wichitan was originally charged with 20 counts of making false statements in federal tax returns. She pleaded guilty to one count, the one with the greatest financial loss, as part of a plea deal that dismisses the other charges.

When federal prosecutors announced the indictment in October, they alleged that tax returns prepared by Hernandez-Smith had claimed the child tax credit, additional child tax credit and earned income credit, even though the clients were ineligible. The charging document listed a tax loss of slightly more than $100,000 connected to eight separate taxpayers for tax years 2013, 2014 and 2015.

Hernandez-Smith admitted in a plea agreement that she obtained individual tax identification numbers for the children of a niece of one of her clients, even though she knew the family lived in another country.

As the tax preparer, she caused her client to claim credits that he was not eligible for on his IRS Form 1040, and he was paid a greater tax refund than he was entitled to, the plea agreement says.

The loss to the IRS in that one case amounted to $7,814.

A similar scheme was used for several other people between 2013 and 2015, Hernandez-Smith admitted. The cases combined for a loss of $105,050.

Sentencing is scheduled for Oct. 26. She could face up to three years in federal prison and a fine of up to $100,000.

The court could order probation with a mandatory schedule of payments as a condition of supervised release. She has already agreed to pay restitution to the IRS for the full amount of the loss.

The plea agreement suggests that the U.S. Attorney’s Office will seek to ban her from filing federal or state tax returns for other people.

This story was originally published July 26, 2020 at 7:16 PM.