BEAUMONT, Texas — A Beaumont woman has been sentenced to federal prison and has to pay restitution after pleading guilty to tax crimes.
Michelle Denise Johnston, 42, pleaded guilty to 'making and subscribing a false return and aiding and assisting in the preparation of a fraudulent return' and has been sentenced to 15 months in federal prison. Johnston was also ordered to pay $196,177 in restitution.
According to information presented in court, Johnston was a was a paid tax return preparer who was working at Allen and Johnston Tax Service (AJTS), in Beaumont.
In 2011, Johnston along with another woman formed AJTS. Each had worked as Jackson Hewitt Office Managers at different Wal-Mart locations and decided to open their own tax preparation business. AJTS existed until February 2021.
Johnston requested refund amounts on customers’ tax returns that were not based on the customers’ actual income, expenses, deductions and applicable qualifying credits. Instead, she illegally inflated refunds based on fabricated income, expenses, deductions and credits reported by Johnston without the customers’ knowledge.
Johnston then electronically submitted the fraudulent return information to the IRS via wire. The IRS deposited the tax refunds for Johnston’s customers with a third-party vendor.
Johnston then caused the third-party vendor to pay the customers a modest tax refund she originally made known to them.
Before the third-party vendor paid the customers, Johnston deducted what was essentially a second preparation fee from her customers' refund, without them knowing.
The amount of this second fee was generally the difference between the filed, larger tax refund and the modest tax refund originally told to the customer.
In addition, Johnston signed an income tax return that contained a written declaration that it was made under penalties of perjury. She falsely stated the amount of gross receipts knowing the statement wasn't true. She also fraudulently stated taxpayers’ total expenses on tax returns knowing it was false.
