A Houston woman, identified as Wallace, was ordered to serve 14 months in federal prison, followed by one year of supervised release, U.S. District Judge Alfred H. Bennett said. The court heard that Wallace used fabricated expenses to defraud the IRS and tried to hide her role in the scheme. The judge noted a prior federal fraud conviction from 2003 when imposing the sentence.
From 2017 to 2023, Wallace owned Donahue Tax Service. Prosecutors described her as a "ghost preparer" who made clients appear to file their own returns. Instead of using the required Provider Tax Identification Number, she created accounts for clients in tax software, according to the case details. She admitted to filing a false 2021 return with $68,453 in false Schedule A deductions, $36,852 in false Schedule C losses for a business that did not exist, and a false education credit. These entries caused a $18,075 tax loss.
Wallace admitted responsibility for $244,824 in losses to the IRS and agreed to pay that amount in restitution. She was allowed to remain on bond and will surrender to a federal prison facility to be set later. IRS Criminal Investigation conducted the investigation, and Assistant U.S. Attorney Brad Gray prosecuted the case.