Bronx tax preparer known as "the magician" arrested for $100 million tax fraud

Federal authorities have arrested Rafael Álvarez, known as “the magician,” in the tax filing world. The founder of the ATAX firm with a presence throughout New York, Álvarez has been accused of conspiring to defraud the United States government of more than $100 million.

According to the U.S. Attorney's Office for the Southern District of New York, Alvarez, 60, devised a large-scale scheme to file tens of thousands of individual tax returns with false information, with the goal of reducing his clients' tax burden and generating millionaire profits for private companies.

“Rafael Alvarez was allegedly so prolific in falsifying his customers’ tax returns that he came to be known as ‘the Magician’ for his ability to make customers’ tax burden disappear,” said U.S. Attorney Damian Williams.

“But, Alvarez’s sleight of hand was criminal tax fraud, a serious federal tax crime he was allegedly committing for over a decade, depriving the IRS of more than $100 million in tax revenue. Today’s charges, on Tax Day, should serve as an important reminder to tax professionals that when they try to cheat the public, they will face grave consequences.” 

According to the indictment, between 2010 and 2020, ATAX's Bronx County office prepared approximately 90,000 tax returns, all of which contained fraudulent information. This included the inclusion of false tax deductions, fabricated capital losses, false business expenses, and fraudulent tax credits.

“Alvarez prepared tax returns for his clients and recruited, supervised and directed other ATAX personnel who in turn prepared tax returns for other clients,” the U.S. Attorney detailed in a statement.

Additionally, the defendant and an employee of the firm also lied to an IRS agent during the investigation.

Álvarez's arrest occurred precisely on the last day of the deadline to submit taxes to the federal government.

The Federal Prosecutor's Office has charged Álvarez with conspiracy to defraud the United States, which carries a maximum sentence of five years in prison.

He faces potential additional charges of complicity in filing false federal tax returns, attempting to interfere with the administration of internal revenue laws, making false returns and aggravated identity theft.