Sylmar Tax Preparer Charged in Phony Deduction Scheme

A Sylmar tax preparer who allegedly charged his clients about $5,000 in commissions for tax deductions they received from non-existent contributions to a church based in his home was arrested on suspicion of tax fraud this week, federal authorities said.

The tax preparer, Rudolf Kies, 56, was indicted by a federal grand jury on nine counts of preparing fraudulent income tax returns in 1983 and 1984. Kies’ attorney, Kerry Bensinger, said his client will plead innocent to all charges when he is arraigned Monday.

Kies was arrested Wednesday and was freed after posting a $10,000 bail. If convicted, he faces a maximum of three years in jail and $250,000 in fines for each count.

According to federal court documents, Kies prepared federal income tax returns that claimed “large charitable tax deductions when he knew that no such contributions had been made.” Eight of Kies’ clients, most of them from the San Fernando Valley, claimed they made $50,042 in charitable contributions to the Mission Church of America during 1983 and 1984. The claimed contributions, which totaled as much as $12,000 for one couple, saved his clients more than $14,000 in tax payments.

The clients mentioned in Kies’ indictment will be charged as much as $2,000 in back taxes, said Bob Gilligan, a branch chief with the IRS criminal investigation division.

He said Kies’ clients will not be charged with any federal violations. “These are people without understanding of the tax law and rely on . . . the expertise of the preparer that this is legal,” Gilligan said.

Kies, contacted at his home, said he had no comment on the charges.

The Mission Church of America was incorporated in May, 1976, with Kies claiming to be the church’s reverend and president. Its address was the same as Kies’ Sylmar home but had a post office box in San Fernando. Kies requested that the IRS grant the Mission tax-exempt status in July, 1976.

According to incorporation records filed with the state, the Mission Church of America planned to establish a halfway house for drug addicts and provide family counseling and other services usually offered by churches.

But Gilligan said IRS investigators will attempt to prove in a trial that the so-called church never provided those services. He called the church a “bogus organization” that benefited Kies.

Assistant U.S. Atty. Robin Scroggie said Kies received a commission of approximately 10% of the non-existent contributions to the church.

The investigation began when auditors reviewing returns from one of Kies’ clients became suspicious.