LEXINGTON —
J.R. Kennedy, a Richmond-based tax preparer indicted on 23 counts of preparing false income tax returns, entered a guilty plea Wednesday as he was being tried in federal court.
The trial had begun Monday.
According to the agreement accepted by U.S. District Judge Karen Caldwell, Kennedy pleaded guilt to one count involving the 2007 tax return of Randall and Deborah Wallace.
The return contained a deduction which falsely inflated business expenses and reduced the taxpayers’ adjusted gross income, the document states.
The maximum penalty for the crime is three years in prison and a $100,000 fine, plus one year of supervised release.
In the plea agreement, Kennedy waives his right to appear or “attack collaterally the guilty plea, and conviction.”
The agreement does not cover restitution, it states.
However, it obligates Kennedy to make “full and complete disclosure” to the government and assist it in gathering information.
The agreement applies only to charges filed within the federal court system’s Eastern District of Kentucky.
Kennedy was indicted in April 2011 on 23 counts of willfully aiding and assisting in the filing of false federal income tax returns.
“This document and the sealed supplement contain the complete and only Plea Agreement between the United States Attorney for the Eastern District of Kentucky and the Defendant,” it states. “The United States has not made any other promises to the defendant.”
How that may affect other charges pending against Kennedy here was unclear, but other charges may be pursued against him in other federal districts and in state courts, the agreement adds.
Kennedy’s office on North First Street across from the Madison County Courthouse was raided on April 15 by agents of the Internal Revenue Service’s Criminal Investigations Division.
Coincidentally, an anti-tax rally inspired by the national tea-party movement was taking place across the street as athletic-looking men with IRS-CID emblazoned on their blue jackets stood guard outside the office and carried boxes from it.
After news of the apparent raid on Kennedy’s office appeared on www.richmondregister.com, the newspaper heard from clients of his in states ranging from South Carolina, Alabama, Louisiana, Texas and California as well as Kentucky.
Some said they were civilian employees or contractors who worked on U.S. military installations. Kennedy promoted himself by claiming he could obtain tax deductions associated with their specialized work that were unknown to most other tax preparers.
Kennedy’s indictment acknowledged that some of his clients had been employed by the aviation industry.
After their returns were audited, the customers said they learned Kennedy had claimed charitable or other tax deductions, unknown to them, that increased their tax refunds. However, Kennedy had given them copies of tax returns that did not include the bogus deductions and had pocketed the difference.
The customers said they were being made to pay the back taxes as well as interest. Some also said the IRS was unsympathetic to the financial burden this had placed on them.
In April 2009, a Kentucky Revenue Cabinet spokesperson said the state would waive late fees for Kennedy clients whose could not file returns on time because their information had been seized by the IRS.
Bill Robinson can be reached at brobinson@richmondregister.com or at 624-6690.
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Former tax preparer ends trial with guilty plea
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