Kenneth Erdheim, a Woodmere-based accountant and his accounting firm, was charged with criminal tax fraud second-degree for allegedly submitting false New York sate tax returns for 267 clients, according to the Nassau County District Attorney’s office.
Erdheim, 71, the principal of Kenneth Erdheim, CPA, PC was arraigned on Feb. 27. His next court date is March 5. If convicted, the firm would have to $32,667 in fines.
“The tax returns of more than 250 clients were allegedly mishandled by this company, costing the government nearly $130,000 in revenue,” District Attorney Madeline Singas state in a news release. “Due to this company’s alleged misdeeds, their clients now must repay that money to New York state even though they were unaware of the mistakes on the returns. We encourage everyone to research multiple tax preparers and to check their qualifications before filing returns this tax season.”
Singas said that beginning in 2018, the New York State Department of Tax and Finance’s Buffalo office suspected fraud in many of the personal income tax returns for the 2016 tax year submitted by Kenneth Erdheim, CPA, PC.
A subsequent investigation by the Department of Tax and Finance uncovered that the Internal Revenue Service code 414(h) was allegedly listed on the 267 returns. However, they were not entitled to the deduction because they are not government employees.
“Tax preparers who betray the trust of their clients and deprive New York State of tax revenue will be held accountable,” New York State Commissioner of Taxation and Finance Michael Schmidt stated in the release. “We will continue to work with all levels of law enforcement to ensure a level playing field for New Yorkers.”
In May of 2018, the Department of Tax and Finance handed its information to the county DA. Kenneth Erdheim and his company did not benefit financially from the alleged fraud and his clients were not aware it was taking place, the DA said.
His clients remain liable for the $129,638 and will be individually billed by the state Tax Department for the overpayments they were not entitled to. Erdheim will be responsible for paying back any accrued interest.
Erdheim could not be reached for comment as press time.