A Brooklyn man who ran a tax preparation business in Flatbush was sentenced last week in Brooklyn federal court to two years in prison for defrauding the IRS.

Remy Milien, who owned and operated the Maximum Refund tax return preparations company, fabricated people’s tax returns without their knowledge so as to make his services more attractive to his customers.

Between the years 2000 and 2002, Milien defrauded the U.S. government of an estimated $200,000 to $400,000 by listing false tax deductions on the returns of his customers, as well as on his own forms.

He was sentenced before Judge Edward R. Korman to two years in prison last week, after pleading guilty in 2007 to 21 counts of fraud in U.S. District Court for the Eastern District of New York, located on Cadman Plaza East in Downtown Brooklyn.

The IRS determined the extent of Maximum Refund’s fraudulent operations after analyzing tax return forms that passed through its office and interviewing some of the taxpayers, as well as sending an undercover agent to Maximum Refund to have a tax return prepared.

Milien, without asking the agent for any relevant information, prepared a fraudulent tax return form with fabricated deductions. Thus, investigators determined that he was performing these illegal operations without the knowledge of the taxpayers he represented, some of whom may face unanticipated tax debt and audits.

Maximum Refund processed over 2,000 tax returns in total — almost of all of them for low-income individuals. These sorts of crimes are difficult for the IRS to prosecute because they consist of consistent small-scale frauds by third-party tax preparers that aggregate into large-scale fraud after hundreds of repetitions.

Milien fabricated tax deductions on the 1040 income tax returns for his customers — for example, gifts to charity, job expenses, gambling losses and medical expenses. A majority of the returns claimed itemized deductions in excess of 50 percent of the taxpayers’ adjusted gross income, according to court documents.

As Milien performed much of this fraud without the knowledge of his customers, presumably he was trying to make his business more popular by offering customers impossible and illegal savings on income tax.

A close analysis of 26 returns by the IRS revealed that Milien’s fraudulent claims lost the IRS roughly $58,000, which he now owes in restitution. Furthermore, upon analyzing 125 more tax returns processed by Maximum Refund, the IRS found additional losses of over $200,000 in fraudulent claims on more than half of the forms.

Milien’s requests in court for a lower sentence based on his low risk of recidivism were dismissed by prosecutors, as they argued that while he was charged with several counts of fraud, he actually committed these same crimes hundreds of times.

Here are three tips you should know about when filing your 2008 income tax. It’s important that you are aware of them now so that you can take action before the 2008 tax year closes (Dec 31, 2008).

Standard Deductions vs. Itemized Deductions
One thing you should know about filing taxes is that it makes sense to compare your standard deductions against your Itemized Deductions.

If your Itemized Deductions exceed the amount of your itemized deductions, you stand a good chance of saving money by itemizing. If your Itemized deductions are slightly lower, try to shift some of your itemized deductions for the following year to the current year. Here is an example:

Let’s say you have the option to pay real estate tax in 2 installations, consider making the payment in 2008 that would normally be paid in the early part of 2009.

Another tip is to do the opposite, if you don’t think you will be able to take advantage of itemizing in 2008, try to shift some of them for the next tax year, This would work if you plan on purchasing a home in 2009 or you could make your annual charitable contributions in January, 2009 instead of December, 2008.

Flexible Spending Accounts
Now is the time to check if you have money left in your Flexible Spending Account. If you do have extra, make some appointments to use it up. If you don’t, you lose the money.

Medical Deductions
You can claim unreimbursed medical expenses that you incur over the year. IRS rules allow you to deduct them only if they exceed 7.5% of your Adjusted Gross Income. If you are close to that level, consider having elective or necessary medical procedures before the end of the year. But make sure to check that it’s among the qualifying deductible expenses.

Adjusted Gross Income (AGI) is a tax payer’s gross income (before taxes) and subtracting allowable IRS deductions. Here are some of the deductions to use when calculating your AGI:

• Certain business expenses of reservists, performing artists, and fee-basis government officials
• Health savings account deductions
• Certain moving expenses
• One-half of self-employment tax
• Penalties on early withdrawal of saving
• Alimony paid
• Deduction for contribution to an Individual Retirement Account (IRA)
• Student Loan interest deduction

But don’t confuse AGI with Itemized Deductions, such as home mortgage interest expense, medical expenses, property taxes, charitable contributions, among others.

Here is a simple calculator to estimate your Adjusted Gross Income