A pair of sisters who ran a North Charleston tax preparation business were sentenced after pleading guilty to charges of preparing fraudulent tax returns.
Lathasha Failey, 30, was sentenced to one year in prison. Latoya Windham was sentenced to two years probation after cooperating with prosecutors, according to Assistant U.S. Attorney Rhett DeHart. Both pleaded guilty in October to charges of fraudulent tax preparation.
Failey's attorney, Cameron Marshall, said his client "humbly accepts her sentence, is very remorseful for her actions and encourages all taxpayers and preparers to diligently ensure the complete accuracy of all returns."
Windham's attorney could not be reached for comment.
Failey and Windham owned and operated Failey's Tax Service, a tax preparation business in North Charleston, according to Failey's attorney, although in a sentencing memorandum, Windham's attorney stated the business was under Failey's control.
The fraudulent returns included the fabrication of business losses, dependent childcare deductions and expenses and higher education tax credits, according to a memo filed by Windham's attorney.
The sisters caught the attention of the IRS after a pattern of suspicious deductions on tax returns Failey had prepared was detected, according to prosecutors.
Two undercover agents had false returns prepared at the business, according to the sentencing memorandum.
After investigating Failey's client files, the IRS identified at least 145 false tax returns prepared by Failey and her employees between 2009 and 2011, costing the U.S. government $500,000 in lost tax funds, prosecutors said.
Failey and Windham's clients mostly had a "meager income" and Failey had a "misplaced sense of satisfaction in helping the underprivileged modestly improve their financial circumstances," according to a sentencing memorandum filed by Failey's attorney.
The sisters charged an average flat fee of $275 per return, according to the memo.
Marshall stated Failey believed she was helping "economically challenged people and that no one was being victimized by their actions," according to his memorandum.
Federal investigators said taxpayers should be aware of the consequences involved for assisting in the filing of a fraudulent tax return.
"Those who fly in the face of the tax laws face investigation, prosecution, and if convicted, significant prison sentences and substantial fines," said Jeannine A. Hammett, the special agent in charge of criminal investigation of the IRS. "Today's sentence sends a strong message to unscrupulous return preparers who think they can get away with tampering with our nation's tax system."
Reach Natalie Caula Hauff at 937-5594 or Twitter.com/ncaula.