There was more than a pinch of irony as Gerry G. Sonido Jr. stood in federal court Monday--income tax day--and said he couldn't afford to hire his own lawyer.
Sonido's tax preparation and consulting firm in National City, after all, had promised 444 clients tax refunds totaling nearly $1.1 million. And those promises had generated more than $105,000 in revenue for Sonido from last September to Dec. 14, when federal agents seized his documents and equipment.
Sonido last week was indicted by a federal grand jury and charged with one count of conspiracy and 16 counts of filing false tax claims. His wife and two other employees were indicted on one count each of conspiracy.
Bogus Deductions Alleged
The government alleges that the firm amended clients' returns to claim bogus deductions for sales, tax, medical expenses, casualty and theft losses and false income tax credits.
All four have pleaded not guilty. A hearing on motions in the case is scheduled for May 20 before U.S. District Judge Leland Nielsen.
On Monday, U.S. Magistrate Roger Curtis McKee determined that Sonido might well be able to afford his own attorney and ordered him to return to court this Friday to report on his search for counsel.
Because the Internal Revenue Service acted swiftly against Sonido's firm, the government was victimized to the tune of only about $49,000. But all of Sonido's clients, lured by promises of hefty refunds for amending prior years' returns, were victimized to some extent.
Some will have to return the tax refunds they received, plus interest and penalties. And all of them have lost the money they paid in fees to Sonido's firm.
Some of the clients' tax returns and other tax documents were found in a trash dumpster near the firm's office by IRS agents, according to the grand jury indictment.
Most of the clients were Filipino-Americans and none of them had annual incomes of more than $50,000, according to Assistant U.S. Atty. Herbert B. Hoffman.
Although it may be too late for warnings about the 1984 tax season, Hoffman said, common sense can play a big role in preventing abuses and illegal schemes by unethical tax preparation firms.
Some helpful hints, according to Hoffman, include:
- Be leery of tax preparers who will not sign the returns they prepare.
- Be skeptical of preparers or firms that are not interested in reviewing documentation and tax receipts.
- Avoid preparation firms that guarantee refunds or that base their fees on a percentage of the refund amount. "That's an inducement to cheat or increase the refund," said Hoffman.
- Never sign a blank tax return.
- Never allow the refund to be mailed to or cashed by the preparer.
- Select a tax preparer who will be in business after the return is filed.
- When seeking a tax preparer, ask for referrals from various professional societies.
- Review the tax return before you sign it, "no matter who prepares it," said Hoffman. "Don't be afraid to ask any questions."