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Kenneth Erdheim, of Woodmere, was arraigned in Nassau County Court and charged with second-degree criminal tax fraud, a felony, for his firm allegedly submitting 267 false tax returns.
According to Nassau County District Attorney Madeline Singas, starting in 2018, the New York State Department of Tax and Finance’s Buffalo office suspected fraud in many of the personal income tax returns for the 2016 tax year submitted by Erdheim.
The investigation by the Department of Tax and Finance found that an IRS code was allegedly listed on the returns for 267 of Erdheim’s clients, even though they were not entitled to the deduction because they are not government employees.
As a result, the Department of Tax and Finance received $129,638 less in tax money from the taxpayers than was owed under NYS Tax Law.
The misappropriated tax code applies to state or local employees who have government-sponsored retirement plans.
Singas noted that Erdheim and his company did not benefit financially from the alleged fraud and his clients were not aware it was taking place.
However, his clients are still liable for the $129,638 and will be individually billed by the state’s Tax Department for the overpayments they are not entitled to. Erdheim will be responsible for paying back any accrued interest.
“The tax returns of more than 250 clients were allegedly mishandled by this company, costing the government nearly $130,000 in revenue,” Singas said. “Due to this company’s alleged misdeeds, their clients now must repay that money to New York State even though they were unaware of the mistakes on the returns.
“We encourage everyone to research multiple tax preparers and to check their qualifications before filing returns this tax season.”
Erdheim is scheduled to appear back in court on behalf of his company on Thursday, March 5. If convicted, he will have to pay upwards of $33,000 in restitution.
“Tax preparers who betray the trust of their clients and deprive New York State of tax revenue will be held accountable,” New York State Commissioner of Taxation and Finance Michael Schmidt added. “We will continue to work with all levels of law enforcement to ensure a level playing field for New Yorkers.”
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