NEWS / NYC tax preparer accused of bilking IRS out of $145 million

A New York City tax preparer working out of The Bronx is facing charges of tax fraud amounting to approximately $145 million. The man, Rafael Alvarez, 61, was known under the moniker “the magician” for his ability to significantly lower the tax burdens or increase tax refunds of his customers.

“There was no magic to what Alvarez was doing — he was committing a serious federal crime by falsifying tens of thousands of tax returns and, in the process, depriving the IRS of $145 million in tax revenue,” Edward Y. Kim, Acting US Attorney with the Southern District of New York, was quoted by The New York Times as stating.

Prosecutors went on the state the it was one of the largest frauds committed by a tax preparer that the US Department of Justice had encountered in its history.

Alvarez had been running tax preparation business ATAX out of the Marble Hill neighborhood in the Borough of The Bronx in New York City. For over 20 years before that, he was also preparing tax returns out of other locations.

Court documents suggest that Alvarez, along with his employees, regularly falsified his filings by showing fictitious deductions, business expenses, capital losses, and tax credits to benefit his customers. They also reportedly forged medical expenses, charitable contributions, and residential energy credits.

Prosecutors claim that Alvarez hired employees who did not have legal status in the country and then used that fact to intimidate them into participating in his scheme. In one egregious example, he reportedly instructed an undocumented supermarket employee to impersonate a tax preparer.

Alvarez’s business generated millions of dollars in profits, raking in at least $15 million in gross revenue between 2016 and 2019.

Alvarez has now admitted to leading his tax fraud scheme and attempting to obstruct the investigation of federal authorities. He has agreed to pay the IRS $145 million in restitution and to forfeit $11.84 million in fraudulent proceeds that he had received. He still faces up to 8 years in prison and will be sentenced on April 11, 2025.