Marysville tax preparer sentenced to six months in prison
November 10, 2011 · 2:23 PM
MARYSVILLE — Marysville resident Fredrick Seton, 49, was sentenced on Nov. 4 in U.S. District Court in Seattle to six months in prison, one year of supervised release and $159,710 in restitution for willfully aiding and assisting in the preparation of materially false tax returns.
Seton pleaded guilty in June of this year, admitting that over the course of three years, between 2005-2007, he prepared and submitted 205 false tax returns for military service members, claiming false business deductions to reduce their taxable income.
Seton operated a home-based tax preparation business that became popular with members of the military, primarily Navy enlistees.
U.S. District Judge John C. Coughenour imposed the sentence, saying he was giving Seton some credit for his 20 years of Navy service prior to committing this crime.
According to records in the case, Seton charged between $50 and $100 dollars for each tax return he completed, and relied on word-of-mouth referrals for his tax preparation service.
During tax season, cars carrying military personnel would line up at Seton's house to have their returns prepared. Many of Seton's clients told IRS examiners that they'd heard Seton could provide them with the best return.
When an undercover IRS agent went into the business for tax preparation help, Seton told him not to report $23,000 earned in cash from a business. Seton then offered to create business expenses to "zero out" other earned income reported on a form 1099. Seton added vehicle, utility and other undocumented business expenses to offset the undercover agent's income, so that he would receive a bigger refund.
In asking for a prison sentence, prosecutors noted that, as a veteran, Seton's benefits are supported by those who honestly pay their taxes, and his activities will actually harm the service men and women he was claiming to assist.
"The defendant prepared at least 205 false tax returns involving over 100 unique taxpayers," prosecutors wrote in their sentencing memo. "Though each taxpayer initially benefitted financially from the defendant's actions, these taxpayers are now victims of Mr. Seton's crime. Their returns will now be audited by the IRS, some five to seven years after the returns were submitted, and the IRS will attempt to recover the taxpayers' undue refunds, resulting in turmoil and instability in their financial lives at a time when most cannot afford it."
The case was investigated by the Internal Revenue Service Criminal Investigation and prosecuted by Assistant U.S. Attorney Matthew Diggs.