Pierce County tax preparer arraigned for tax fraud conspiracy involving preparation of false income tax returns

 

Defendant followed in father’s footsteps after he was convicted of similar conduct

Date: March 13, 2020

Contact: newsroom@ci.irs.gov

Tacoma, Washington – A Lakewood, Washington man was arraigned today in U.S. District Court in Tacoma for a multi-year fraudulent tax preparation scheme he operated, even after his father went to prison for the same conduct.  Cleo J. Reed Jr., created “Just Us Tax Service” and later merged it with “Young’s Tax Service.”  The companies filed tax returns falsely claiming high rates of Earned Income Tax Credits (EITC) to increase clients’ tax refunds and therefore the fee they would receive for tax preparation.

Reed Jr. pleaded “not guilty,” and trial was scheduled for May 12, 2020, in front of U.S. District Judge Benjamin H. Settle.

According to records filed in the case, in 2011 and 2012, even as Reed Jr’s father’s tax preparation business was under investigation for preparing fraudulent returns, Reed Jr opened and operated “Just Us Tax Service” and allegedly used the same fraudulent technique utilized by his father’s tax preparation business.  When the IRS terminated Reed Jr’s tax prep registration, he had an acquaintance open and register “Young’s Tax Service” in 2014 and continued filing tax returns with fraudulent entries for Earned Income Tax Credit.  Reed Jr filed the false returns from his home, from Everyday Essentials, the marijuana dispensary he owned and operated in Puyallup, and from his employment location with the Sumner School District.

The total amount of tax loss in this case and the illegal gain to Reed Jr is still being calculated.

Reed Jr is charged with one count of conspiracy to defraud the United States and seven counts of aiding in the preparation of false tax returns.  Conspiracy is punishable by up to 5 years in prison and aiding in the preparation of false tax returns is punishable by up to three years in prison.

The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), and is being prosecuted by Assistant United States Attorney Arlen Storm.