Tax 'magician' bilked IRS out of $100 million, arrested on April 15: Feds

A Bronx tax preparer from northern Westchester, known as "The Magician," is accused of cheating the IRS out of more than $100 million during a decade-long scheme to underreport tax returns through fake business expenses and other made-up deductions.

Rafael Alvarez, of Cortlandt Manor, was arrested Monday — Tax Day — following his indictment on federal charges related to his ATAX businesses that filed more than 90,000 tax returns since 2011.

Alvarez appeared in U.S. District Court in Manhattan, where he pleaded not guilty and was released on $600,000 bond.

“Rafael Alvarez was allegedly so prolific in falsifying his customers’ tax returns that he came to be known as ‘the Magician’ for his ability to make customers’ tax burden disappear," U.S. Attorney Damian Williams said in a news release. "But Alvarez’s sleight of hand was criminal tax fraud, a serious federal tax crime he was allegedly committing for over a decade."

ATAX allegedly filed tens of thousands of false tax returns by making up figures for itemized deductions like charitable contributions and medical expenses and lying about rental income, higher education tuition costs, energy costs and other categories. Between 2016 and 2019 alone, the firm had gross revenues of over $15 million, according to the indictment.

"Many of the numbers that Alvarez entered were completely fictitious, and were not supported by any evidence or documentation," according to the indictment.

Alvarez is also accused of having one employee use an associate's credentials to obtain a prepaper tax information number so they could submit customers' tax returns. The employee posed as the associate during a meeting with an IRS agent in 2017. The agent didn't learn of the subterfuge for years, according to the indictment.

Alvarez is charged with conspiracy to defraud the United States, aiding and abetting the filing of false federal tax returns, attempting to interfere with the administration of internal revenue laws, making false statements and aggravated identity theft. He faces up to five years in prison, including a minimum of two years if convicted on the identity theft charge.

This article originally appeared on Rockland/Westchester Journal News: Tax 'magician' accused of ripping off IRS arrested on Tax Day