Tax Preparer Jailed for Preparing Fraudulent State Tax Returns

Date: 6/16/2005

RALEIGH – A Garner tax preparer received an active prison sentence Wednesday after pleading guilty to tax charges filed by the North Carolina Department of Revenue.

Nathan Herbert Miller, 59, of 4808 Durgancroft Place, Fuquay-Varina, entered guilty pleas in Wake County Superior Court to 29 felony counts of aiding or assisting in the preparation of fraudulent North Carolina individual income tax returns. He owned and operated Herbert Miller Tax Service, located at 1201Aversboro Road in Garner.

Wake County Superior Court Judge James C. Spencer, Jr. sentenced Miller to a 13-month minimum, 16-month maximum active prison term in the North Carolina Department of Corrections. He was immediately taken into custody to begin serving his sentence. Miller was prohibited from preparing tax returns for others upon completion of his sentence.

The state’s evidence showed that Miller prepared over 3,800 individual income tax returns for taxpayers from 40 different counties for the 2001, 2002, and 2003 tax years. Approximately 60 percent of his clients were car salesmen. Miller materially overstated the itemized deductions and business expenses on his clients’ federal tax returns, which caused the Department of Revenue to issue larger state tax refunds to the individuals than they were legally entitled to receive.

Miller worked for several state agencies before retiring from the North Carolina Department of Insurance as a financial crimes investigator.

The Department of Revenue’s investigation found that Miller led his clients to believe he was a former Internal Revenue Service agent, a former state auditor, or a certified public accountant, although he was not. Miller claimed that he put only information on the returns that his clients provided to him; however the investigation found that many of his clients did not review their completed tax returns and were unaware of the information Miller had included.

Miller attempted to obstruct the state’s investigation by asking some of his clients to create false documents that would substantiate the fraudulent deductions and business expenses he had included on their returns. He urged them to use various techniques such as creating mileage logbooks using ink in different colors to make it appear that they were legitimate or washing documents and drying them in a microwave oven so that they would appear old.

The Department of Revenue is auditing of all of the returns that appear to have problems. The state has already completed 316 audits and has an additional 1,200 audits scheduled. So far, the state has assessed $557,772 in back taxes as a result of this scheme and additional criminal charges are possible.

The charges against Miller resulted from an investigation by the Department’s Discovery and Special Projects Unit and a special agent with the Department’s Criminal Investigations Division.

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