Tax preparer sentenced to federal prison for $2.4 million IRS fraud

John Thornton, owner of two tax preparation franchises, is headed to federal prison for filing false income tax returns for clients and defrauding the IRS out of millions.

U.S. District Judge Marilyn Horan imposed a term of 18 months, rejecting an argument by his lawyer for probation.

He’ll also have to pay $511,000 in restitution to the IRS.

Thornton, 74, of Gibsonia, ran Tax Centers of America as a franchisee in McKees Rocks and the city of Pittsburgh.

He pleaded guilty to aiding in the preparation of false returns for clients from 2012 to 2017.

He and his employees prepared personal returns that contained false Schedule C attachments for business profits or losses in order to obtain refunds at government expense.

Thornton’s lawyer, Stephen Stallings, argued for probation, citing related cases in which defendants avoided prison, although he conceded they may have received deals for cooperation.

Thornton said he was sorry and apologized to his family. He said he feels “awful” for what he’d done.

Assistant U.S. Attorney Greg Melucci said Thornton deserves prison for his “constant pattern” of filing fraudulent Schedule C forms, a problem for the IRS nationwide for decades. He cited one former employee who said Thornton scolded him for not producing enough bogus returns and told him to “step up your game” in preparing the fake attachments.

The judge sided with the government, saying Thornton knew what he was doing in preparing fake returns and directing others to do the same.

The case began in 2017, when the IRS fraud center noticed a pattern of suspicious returns from Thornton’s business.

From 2012 to 2017, his preparers generated 1,010 returns. More than half included Schedule C attachments. But the average in the Pittsburgh area is just 16%.

The fraud cost the IRS $2.4 million in unauthorized refunds.

In addition to the prison term and the restitution, Thornton will be on probation for two years.