Tonda Avery, 55, of Evansville, has been sentenced to one year and one day in federal prison, followed by one year of supervised release, after pleading guilty to five counts of Aiding and Assisting in the Preparation and Presentation of a False and Fraudulent Tax Return. Avery was also ordered to pay $1,318,455.43 in restitution. This case was brought as part of the Trump Administration’s Task Force to Eliminate Fraud.
According to court documents, Avery operated Diversity Tax Service (DTS) in Evansville, Indiana. Avery prepared federal income tax returns for clients and employed other tax return preparers at DTS. Between 2020 and 2021, Avery prepared and filed approximately 123 tax returns containing false Forms 7202, causing a total tax loss of $965,203.
Form 7202 allowed eligible self-employed individuals to claim refundable tax credits for certain periods in which they were unable to work because of circumstances related to COVID-19. As part of her scheme, Avery manufactured or inflated her clients’ eligibility for these credits.
For clients who did not own legitimate businesses, Avery created fictitious businesses and prepared false Schedule C forms reporting nonexistent business income and expenses. She then used the fictitious businesses to support fraudulent Forms 7202 and claim COVID-19 sick and family leave tax credits to which the clients were not entitled.
For clients who did have legitimate businesses, Avery inflated information used to calculate the credits, including the number of days the clients purportedly were unable to work and their net earnings from self-employment. These false figures resulted in the clients claiming larger tax credits and receiving refunds greater than they were entitled to receive.
The prevalence of Forms 7202 in Avery’s returns was dramatically higher than among taxpayers generally. In 2020, approximately 33.82% of the returns Avery filed included a Form 7202, compared with approximately 0.90% of returns nationwide and 0.50% of returns in Indiana. In 2021, Forms 7202 appeared on approximately 61.14% of Avery’s returns, compared with approximately 0.90% nationwide and 0.40% in Indiana.
Avery also instructed and encouraged other tax return preparers at DTS to prepare fraudulent returns, including returns containing false Forms 7202.
Avery charged fees based on the number of forms and schedules included in a tax return. When Avery added a fraudulent Schedule C and Form 7202 to a client’s return, she increased her fee by $800.
“Ms. Avery’s scheme exploited pandemic relief programs designed to help Americans in genuine need,” said Tom Wheeler, United States Attorney for the Southern District of Indiana “By deliberately falsifying tax returns and coaching others to do the same, she undermined public trust and diverted critical resources intended to support workers during an unprecedented national crisis. Although the pandemic ended years ago, our office remains steadfast in pursuing those who defrauded these vital programs, no matter how long it takes to bring them to justice.”
“Tax preparers are paid to know the rules—not rig them,” said Robert J. Kuszynski, Acting Special Agent in Charge, IRS Criminal Investigation, Chicago Field Office. “Tonda Avery invented businesses, falsified tax forms and inflated tax credits her clients had no right to claim. That’s not cutting corners, that’s fraud. Today’s sentence sends a simple message: if you make a business out of cheating the tax system, eventually the bill comes due.”
The Internal Revenue Service – Criminal Investigation investigated this case. The sentence was imposed by U.S. District Judge Matthew P. Brookman.
U.S. Attorney Wheeler thanked Assistant U.S. Attorney Matthew Miller, who prosecuted this case.
On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (“Fraud Division”). The Fraud Division is investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.