A man from Kingsport, Tennessee, has pleaded guilty to tax crimes and wire fraud for his involvement in a scheme to claim fraudulent refunds using COVID-19 employment tax credits. Edward Zanes admitted in court that he conspired with others to file false tax returns based on the employee retention credit and paid sick and family leave credit. These credits were established by Congress to help businesses affected by the COVID-19 pandemic.
According to court documents and statements made during proceedings, Zanes and his co-conspirators created fake businesses without any employees or operations. The purpose of these businesses was solely to obtain fraudulent tax credits. Zanes assisted in preparing multiple false tax returns for these entities and ensured that refund checks were sent to addresses controlled by him and his associates.
The scheme resulted in the filing of false tax returns claiming over $3.4 million in refunds, with more than $1.8 million actually received from the IRS.
Zanes is scheduled for sentencing on January 7, 2026. He faces up to 20 years in prison for conspiring to commit mail and wire fraud, up to 20 years for each count of mail fraud, and up to three years for each count of aiding and assisting in filing a false tax return. Sentencing will be determined by a federal district court judge after reviewing the U.S. Sentencing Guidelines along with other legal considerations.
The investigation was conducted by IRS Criminal Investigation and the U.S. Secret Service. Trial Attorney Zachary A. Cobb from the Justice Department’s Tax Division and Assistant U.S. Attorney Mac Heavener for the Eastern District of Tennessee are prosecuting the case.
