Tax Preparer

Mark A. Knight thought he had it all planned: Dangle the promise of a hefty tax refund in front of unsuspecting people, charge $100 for preparing their returns and make fast money. The problem was, Knight, 38, of Thurmont was improperly indicating refunds were due. When the Internal Revenue Service got wind of his scheme - after mailing refund checks for nearly $1.2 million to hundreds of Knight's customers - officials stepped in. In August, Knight pleaded guilty to two counts of aiding and assisting in the preparation of false tax returns from May 1999 to May 2000.

MORE THAN half of the 130 million taxpayers expected to file federal returns this year have yet to do so, and if you're one of them, you may still be wondering which is the best way to file. You can stick to old-fashioned paper, pencil and eraser, or file via computer or over the telephone if eligible. Maybe you should hire someone else to do the job. Within these options are more choices. For instance, do you buy tax-preparation software or pay a Web site to use its software? What do you look for when hiring a tax preparer?

Western Maryland College students and others trained by Internal Revenue Service agents will offer free tax help through the federal Volunteer Income Tax Assistance (VITA) program. The program, open to students and others who cannot afford professional preparation services - especially older, handicapped and non-English-speaking taxpayers - emphasizes self-help assistance to those who can help with the preparation of their own taxes. Students will provide complete tax preparation if needed, said Susan Milstein, professor of economics and business and coordinator of the WMC program.

A former Baltimore tax preparer who admitted cashing more than $160,000 in Internal Revenue Service refund checks mistakenly mailed to his St. Paul Street office was sentenced yesterday to 12 months in a federal work-release program. U.S. District Judge Herbert N. Maletz also ordered James Elwood Lewis Jr. to pay restitution and serve two years' supervised release, closing one of two criminal cases that grew out of what investigators described as an exceptional blunder by the IRS. For most of the 1990s, the agency wrongly mailed hundreds of corporate tax refunds to a rowhouse at 2429 St. Paul St., where Lewis had a first-floor office.

Five men, including a former IRS revenue officer, were charged with fraud yesterday for cashing more than $600,000 in tax refund checks that had been mistakenly sent to a Baltimore rowhouse for much of the past decade, federal prosecutors said. James Elwood Lewis Jr., 44, a former Internal Revenue Service employee who later operated a tax preparation business at the rowhouse, was indicted by a federal grand jury on 11 counts of bank fraud, court documents show. Lewis is accused of forging endorsements on more than $160,000 in checks made payable to former corporate clients, and then depositing them in his business' bank account, between 1991 and 1993.

Crystal Coleman knew something was wrong with her taxes. Though she had had them prepared professionally, the refund didn't seem large enough. Yesterday morning, her tax records in hand, the 45-year-old West Baltimore resident boarded a Maryland Rail Commuter service train bound for Washington wondering whether to call the government for help. But she wouldn't have to. On the way to her job as a community supervision officer for the Court Services and Offender Supervision Agency for the District of Columbia, she was surprised to hear the conductor announce that representatives of the Internal Revenue Service would be providing free tax help right on the train.

You recently advised someone who works in the film industry about saving for retirement, suggesting that he set up a Simplified Employee Pension or SEP-IRA. I am a film worker, and I got into trouble with the IRS last year because I have been putting my retirement savings into a SEP-IRA.Although most people who work in the film industry think of themselves as self-employed because they aren't on the payroll of a studio or production company, they probably do not qualify for a SEP-IRA either.

Kansas City, Mo. -- H&R Block Inc. agreed yesterday to buy Olde Financial Corp. for $850 million in cash, to further diversify the largest tax-preparation company into stock brokerage.Block shares fell $4.635 to close yesterday at $51, a two-month low, amid concern about fraud investigations and fines that Olde has faced. Analysts' also warned that Block might be taking on too much debt in a two-year diversification spree. The shares' 8 percent decline was the third-biggest in the Standard & Poor's 500 index.

WITH TAXES on most people's minds, here is a warning from Tax Hotline: "Don't let your accountant send you to jail. Some unsophisticated accountants use fictitious cost figures to reduce capital gains taxes -- or even create losses."It describes understating income, padding deductions and other ways to lower your taxes."Remember you sign the return. You're on the hook for tax fraud if you sign a return knowing you understated your tax liability. Fire an accountant who gives in to the temptation to cheat."

Michael D. Walls is the kind of guy who loves the new, more complicated Maryland tax form. He loves the separate calculations for state and local taxes, the 10 new lines, the four extra work sheets.Walls is not a sadist. He's a tax preparer, and business is picking up."Much, much busier," Walls said as eight customers sat waiting in his cozy brick office on Light Street in South Baltimore. "We're happy as can be about it."It's a different story elsewhere in Maryland. People filling out their tax returns are figuring out that the rules are different now for local and state taxes, requiring more arithmetic.