Susan Guan, Tax Fraud, California 2024

Torrance tax preparer Susan Guan and her company SRN Financial Services Inc. have been shut down for promoting a tax-fraud scheme that could have cost the U.S. Treasury millions of dollars. A federal court in Los Angeles issued permanent injunctions barring Guan and SRN from preparing tax returns for others, according to the Justice Department.

The government complaint alleged that Guan and SRN promoted a tax-fraud arrangement known as the redemption or OID redemption scheme. This scheme involved filing false IRS forms, including tax returns, amended returns, and IRS Forms 1099-OID, to request fraudulent tax refunds based on phony claims of large income tax withholding.

The Internal Revenue Service (IRS) catches the vast majority of bogus redemption-scheme tax returns and blocks the claimed refunds. However, Guan allegedly requested a total of $4.5 million in fraudulent refunds for one of her customers, with a single refund of $851,786 requested on a false amended tax return with 16 bogus Forms 1099-OID.

Guan’s case is one of seven lawsuits filed across the country last month against alleged redemption scheme promoters. In those cases, the defendants prepared tax returns requesting a total of $562.4 million in bogus refunds. Altogether, according to the IRS, redemption scheme participants have requested a total of $3.3 trillion in fraudulent refunds.

John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson A. Hoffman, the Justice Department trial attorney who handled the case, and Shauna Henline, the IRS senior technical advisor who conducted the investigation.

In the past decade, the Justice Department’s Tax Division has obtained more than 430 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department’s website.

As tax season approaches, it’s essential to be vigilant and report any suspicious activity to the authorities. If you suspect someone is promoting a tax-fraud scheme, contact the IRS immediately.

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