A Prince George's County accountant pleaded guilty today to preparing false Maryland tax returns as part of a scheme in which prosecutors say he inflated tax deductions on behalf of about 115 clients by more than $1 million in 1980, 1981 and 1982.
Melvyn L. Ivy, 41, of Oxon Hill, pleaded guilty to two counts of a 13-count indictment before Anne Arundel County Circuit Court Judge Raymond G. Thieme Jr. The remaining 11 counts were dismissed.
Ivy faces a possible maximum penalty of 10 1/2 years in prison, a $1,000 fine and paying 50 percent of the taxes due on the false returns. He remained free on bond today pending sentencing Jan. 7.
According to documents filed with the court by the prosecutors, Ivy prepared generally accurate figures for his clients' federal tax returns -- as distinct from their state returns -- and was caught only when auditors in a special state tax monitoring program spotted the discrepancies between federal and state returns.
Assistant Attorney General Dale P. Kelberman, who prosecuted the case against Ivy, said in an interview that it appeared that Ivy had assumed the federal Internal Revenue Service checked returns more closely than the state Comptroller's Office and thus provided more accurate data on the federal returns.
Ivy, Kelberman said, apparently was unaware of the comptroller's Federal Adjusted Gross Income Match Program, which is specially set up to watch for federal-state discrepancies in the returns of Maryland residents. Ivy declined to discuss the matter.
In papers filed in court by Kelberman, Ivy was accused of inflating medical expenses, interest payments and other tax deductible items on the state tax returns of numerous clients while he worked as a part-time tax preparer in the early 1980s.
For example, according to court papers, Ivy prepared the state returns of a Fort Washington couple for 1980, 1981 and 1982, inflating various deductions for them by a total of $8,933 over the deductions declared on their federal returns.
This translates into "additional taxes due the State of Maryland of $670.37," according to the papers.
The false deductions claimed by Ivy's 115 clients in the 1980-82 period amounted to "an additional Maryland taxable income of $1,058,314.80," according to court papers, "and a total of additional taxes due the State of Maryland, not including penalties and interest, of $79,310.79."