Tax Thief Gets 25 Months

⏱ 3 min read

Tracey Hernandez, 39, of Burlington, North Carolina, is headed to federal prison for 25 months after pleading guilty to cooking up a million-dollar tax refund scheme. The feds say Hernandez filed over 200 bogus tax returns for clients in 2021 and 2022, raking in fraudulent refunds. The sentencing came down this week after she admitted to aiding and assisting in the filing of false returns last September.

Hernandez operated as a “ghost preparer,” meaning she did the work but didn’t sign the returns – a classic move to distance herself from the fraud. Investigators with the IRS-CI uncovered a pattern of fabricated education expenses, bogus education credits, and falsified Schedule C forms claiming business profits. She also added false credits for sick and family leave for her self-employed clients. The total damage? A staggering $2,106,281 in fraudulent refunds.

The scheme wasn’t sophisticated. IRS data flagged the unusually high number of refunds connected to Hernandez’s clients. Agents with IRS-CI started digging and quickly found the pattern of falsified documents. They built a case showing Hernandez knowingly prepared the fraudulent returns to enrich herself and her clients.

Beyond the prison sentence, Hernandez is on the hook to pay back the full $2.1 million she fraudulently obtained. Assistant U.S. Attorney Ashley Waid prosecuted the case for the Middle District of North Carolina. Expect more aggressive tax fraud investigations as the IRS cracks down on preparers pushing the limits.