SALT LAKE CITY, Utah (ABC4) – Two Utah men and their tax business in Provo have been charged on suspicion of a COVID-related tax scheme to defraud over $11 million from the United States government.
39-year-old Zachary Bassett of Provo, and Mason Warr, 37, of Vineyard, and their co-founded business, 1099 Tax Pros in Provo, have been charged with conspiracy to defraud the federal government, wire fraud, and aiding and assisting in filing false tax returns.
According to court documents, Bassett and Warr took advantage of COVID-related tax credits such as the employee retention tax credit (ERC), from April 2020 to August 2021.
Bassett and Warr allegedly falsified the company’s number of employees, paid wages, sick leave wages, and family leave wages due to COVID as well as the information of clients in order to receive the maximum amount of credits. Court documents also accuse the business of forging clients’ signatures on some tax forms seeking COVID-related tax credits.
Bassett and Warr also allegedly instructed and trained their employees on how to prepare the tax forms to include false or fraudulent information to increase the number of credits received. Employees were also allegedly trained on how to retain clients.
Overall, Bassett and Warr, as well as 1099 Tax Pros, have been accused of falsifying over 1,000 tax forms, resulting in over $11 million in COVID-related credits. Court documents allege clients were also charged a fee to file the COVID-related tax forms. They were charged an even higher fee if the client of a single-member LLC was married or if credits were claimed for sick and family leave wages.
“During the pandemic, the defendants allegedly took advantage of a program intended to provide critical relief for businesses impacted by the COVID-19 outbreak,” said IRS Criminal Investigation Special Agent in Charge Albert Childress. “IRS CI is committed to bringing justice to those who have exploited the pandemic for personal gain and have stolen from America’s taxpayers.”
The ERC credits were implemented as part of the Cornoavirus Aid, Relief, and Economic Security Act (CARES Act), implemented at the start of the COVID pandemic. The credits were designed to encourage businesses to keep employees on their payroll. Another tax credit, the Families First Coronavirus Response Act (FFCRA) required certain businesses to provide employees with sick leave of up to 80 hours and expanded family and medical leave of up to 10 weeks for reasons related to COVID.
Barrett and Warr were reportedly provided notice that if convicted of the charges, they would turn over any property connected to the scheme to the United States. An initial court appearance has been set for Feb. 22.
All charges are allegations only. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.