Former IRS employee in Mass. pleads guilty to tax fraud and Social Security fraud

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A former Internal Revenue Service employee pleaded guilty on Wednesday to filing fake tax returns to fraudulently obtain tax refunds and stealing Social Security benefits, the U.S. Attorney said.

Kathleen Mannion, 58, of Lawrence, pleaded guilty in federal court in Boston to four counts of aiding and assisting in the preparation and filing of a false tax return and one count of theft of government money, U.S. Attorney Leah Foley said in a statement.

U.S. District Court Judge Nathaniel Gorton scheduled sentencing for Sept. 3. Mannion was charged in March.

From 1998 to 2009, Mannion worked as an IRS contact representative in Andover, prosecutors said.

Between July 2020 through April 2023, Mannion prepared and filed income tax returns for other individuals with the IRS, prosecutors said.

Even though Mannion prepared these returns on behalf of other individuals, she did not list herself as the tax return preparer.

Instead, Mannion prepared the returns to appear as if the taxpayers prepared the returns on their own.

Mannion also listed ineligible dependents on the tax returns, resulting in higher refund amounts for which the taxpayers did not qualify—all without the knowledge of the taxpayers, prosecutors said.

Mannion also filed forms with the IRS directing that a portion of the fraudulently obtained tax refunds be deposited in her personal bank accounts, which she then used for her personal benefit, prosecutors said.

Separately, between April and October 2020, Mannion applied for Social Security retirement, spouse and widow benefits with the Social Security Administration via telephone for other people.

Unbeknownst to these beneficiaries, Mannion directed the Social Security Administration to deposit the Social Security benefits in her personal bank accounts, which she also used for her personal benefit, prosecutors said.

For each charge of aiding and assisting the preparation and filing of a false tax return, Mannion faces a sentence of up to three years in prison, one year of supervised release and a fine of up to $250,000.

For the charge of theft of government money, Mannion faces a sentence of up to 10 years in prison, three years of supervised release and a fine of $250,000.

This is a developing story. Check back for updates as more information becomes available.

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