A 31-year-old Olympia resident, Kyle Baxter, entered a guilty plea in Tacoma federal court this morning to one count of filing a false, fictitious or fraudulent tax refund claim.
He also admitted his role in orchestrating a three-year scheme that cheated not only the government, but individuals whose tax returns he prepared and filed.
In his plea agreement, Baxter admitted that he represented himself to be a provider of tax preparation services from 2010 through 2013, operating under the name “Baxtax.” He maintained a website and promoted his services through advertisement in local media, although he never obtained a Preparer Tax Identification Number, ordinarily required of any person or entity that prepares tax returns for a fee.
During that three-year period, Baxter, a firefighter, filed tax returns for at least 280 people, many of whom were fellow firefighters, as well as emergency medical technicians and paramedics. In many of those filings, he claimed deductions and credits for which his clients were plainly ineligible, such as child tax credits for clients without children, which had the effect of increasing the refunds paid by the IRS to the clients.
Baxter provided clients with paper copies of tax returns purportedly reflecting their filings. But, unbeknownst to these clients, he actually filed returns with distorted numbers that yielded even larger refunds. Then he secretly diverted significant portions of these refunds to himself.
U.S. Attorney Jenny Durken said that, over the course of the scheme, Baxter stole at least $250,000 in taxpayer funds by partially diverting refund payments in this manner. He will be sentenced in October and could receive up to five years in prison.