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Salinas preparer pleas to fabricating deductions

July 29, 2009

The U.S. Attorney’s Office said Lydia Hernandez admitted she had prepared and filed 39 false returns for 13 clients from 2002 to 2005 through her Salinas business, Lydia Hernandez Tax Services. They said she told prosecutors that she helped reduce her client’s taxable incomes to allow them to obtain bigger refunds.

An IRS investigation found Hernandez had knowingly filed for some clients who owned businesses unqualified deductions including gifts, dry cleaning, cell phone expenses, gym fees and union dues, the U.S. Attorney’s Office said.

Ms. Hernandez now faces prison time and ruinous fines. If that prospect doesn't deter dishonest preparers, an IRS-enforced continuing education program probably won't do the trick either.