DOJ: Houston tax preparer admits to multiple tax fraud schemes

• Castro operated two businesses, withheld taxes from employees but did not remit them, and prepared fraudulent tax returns for clients.
• Her actions caused approximately $400,000 in losses to the U.S. Treasury and she faces up to eight years in prison and a $110,000 fine.

Levi Casildo Castro, a Houston tax preparer, admitted to willfully failing to collect and pay over tax and to assisting in the preparation of false tax returns. She operated LC Home Remodeling and Maid Service and A&M Home Remodeling and Cleaning, where she withheld but did not remit federal taxes from employees’ wages.

Castro also prepared tax returns without authorization, falsely indicating clients had prepared them, and inflated wage and withholding information to increase earned income tax credits. Her actions resulted in approximately $400,000 in losses to the U.S. Treasury, and she faces up to eight years in prison and a $110,000 fine.

• $400,000 Losses to the U.S. Treasury
• $110,000 Maximum fine

• Review all client tax returns prepared by Levi Casildo Castro for inflated wage, withholding, and earned income tax credit entries.
• Verify employee tax withholdings and remittances for LC Home Remodeling and Maid Service and A&M Home Remodeling and Cleaning.
• Check for unauthorized tax preparers submitting returns falsely indicating client self-preparation.

This case highlights the risks of internal fraud and unauthorized tax preparation, which can lead to significant financial losses and regulatory penalties. Compliance officers must ensure that all tax preparers are properly authorized and that tax withholdings are accurately collected and remitted. The manipulation of tax return information to inflate credits not only defrauds the government but also exposes organizations to criminal liability and reputational damage, underscoring the need for robust internal controls and regular audits.