Tax Preparer Known As 'The Magician' Defrauds IRS Of Millions: Feds

CORTLANDT MANOR, NY — A Westchester County man and tax preparer in the Bronx was accused of filing thousands of false tax returns causing more than $100 million in fraudulent tax loss.

Damian Williams, the United States attorney for the Southern District of New York, said Monday that Rafael Alvarez, aka “the Magician,” was arrested and charged with conspiracy to defraud the U.S., making false statements, four counts of aiding and assisting preparation of false and fraudulent U.S. individual income tax returns, attempting to interfere with the administration of internal revenue laws and aggravated identity theft.

The charges stem from his orchestration of a wide-ranging scheme to file tens of thousands of federal individual income tax returns that included false information designed to fraudulently reduce the individuals’ tax burden and to make false statements to the IRS.

Williams said Alvarez was so prolific in falsifying his customers’ tax returns that he came to be known as “the Magician” for his ability to make customers’ tax burdens disappear.

“But, Alvarez’s sleight of hand was criminal tax fraud, a serious federal tax crime he was allegedly committing for over a decade, depriving the IRS of more than $100 million in tax revenue,” he said.

“Today’s charges, on Tax Day, should serve as an important reminder to tax professionals that when they try to cheat the public fisc they will face grave consequences,” Williams said.

Prosecutors said from 2010 to 2020, Alvarez, 60, of Cortlandt Manor, was CEO, owner and manager of ATAX New York LLC, which was doing business also under other names.

It was a high-volume tax preparation company located in the Bronx, and prepared about 90.000 federal income tax returns for its customers during this period.

He not only prepared tax returns for customers but recruited, supervised and directed other ATAX personnel who prepared tax returns.

During the period, prosecutors said Alvarez oversaw a sweeping fraudulent scheme where he and his employees submitted false information to the IRS in customers’ tax returns.

The false information included bogus itemized tax deductions, made-up capital losses, phony business expenses and fraudulent tax credits — all of which served to fraudulently reduce the customers’ tax liability and increase their tax refunds from the IRS.

Authorities said, in total, Alvarez’s work deprived the IRS of substantially more than $100 million in tax revenue.

His operation helped the company generate about $15 million in gross revenues over the period from 2016 to about 2019.

The conspiracy to defraud and false statements charges carry a maximum sentence of five years in prison, the preparation of false tax returns and interference of IRS laws carry a maximum sentence of three years in prison. The aggravated identity theft carries a mandatory minimum sentence of two years in prison.