Rocky Mount Tax Preparer Pleads Guilty in $3.9 Million Scheme That Inflated Clients' Refunds and Fees

Published Nov. 6, 2026. Case status is current as of that date.

A storefront tax office can feel like the safest place to hand over a year of paperwork. Federal prosecutors in eastern North Carolina say one Rocky Mount business used that trust to inflate clients' refunds and then take excessive fees out of them. On Oct. 28, 2026, the U.S. Attorney's Office for the Eastern District of North Carolina announced that Chowan Watson, 55, of Rocky Mount, had pleaded guilty in federal court to one count of aiding and assisting in the preparation of a false tax return, in a case involving a tax loss of about $3.9 million [1].

Status: Watson has pleaded guilty but has not been sentenced. Her co-defendant, Angela Dickens, is described in the release as having "previously pleaded guilty." The release does not give Dickens's sentencing status.

What the plea covers

According to the U.S. Attorney's Office [1]:

• Watson and Dickens operated Empire Tax Service, later renamed K&J Tax Service, in Rocky Mount.
• From 2017 to 2023, they "fraudulently filed hundreds of tax returns by inflating 'Other 1099 Withholding' amounts."
• The scheme "inflated taxpayer refunds and allowed them to take excessive fees from those refunds."
• Total tax losses are approximately $3.9 million.

The release does not say how many clients were involved or whether any knew about the inflated figures, and we do not speculate. It also does not name any client, and neither do we.

"They preyed on the trust of hardworking Eastern North Carolinian taxpayers and twisted a legitimate tax preparation service into a personal profit machine," said U.S. Attorney Ellis Boyle [1]. Those are the prosecutor's characterizations, made in connection with the guilty plea.

The people and their status

Chowan Watson, 55, Rocky Mount, N.C. Chief U.S. District Judge Richard E. Myers II accepted her plea. She faces a maximum of 36 months in federal prison when sentenced "later this year," and she has agreed to pay restitution to the IRS. The release gives the case number as 5:26-CR-125-M in the Eastern District of North Carolina. The date of the plea hearing is not stated in the release.

Angela Dickens. Named in the release as Watson's partner in operating the business, and as having previously pleaded guilty. Her age, city, charge and sentencing date are not stated.

IRS Criminal Investigation investigated the case [1].

How inflated withholding can work

A tax return reports how much income tax was already withheld from your pay or other income. If a preparer overstates that number, the return shows that you overpaid and the IRS owes you a bigger refund. A preparer whose fee comes out of the refund can have an incentive to make that refund larger. The IRS can later find the false figure, and the person whose name is on the return may face questions about it. The release says only that the scheme inflated withholding amounts and refunds; it does not describe any client's experience.

Red flags

These are general warning signs, not claims about any person in this case.

• A refund much larger than in past years with no change in your life.
• Withholding or "1099" amounts on your return you do not recognize.
• Preparer fees taken from your refund instead of billed separately, or based on a percentage of it.
• A preparer who will not give you a copy of the return or lets you leave without reviewing it.
• A business that changes its name and keeps operating after complaints.

What to do

• Compare your return to your W-2s and 1099s line by line before filing.
• Ask for a full copy and keep it with your records.
• Check your IRS online account at IRS.gov for the return as filed.
• If a preparer misreported your income or withholding, talk to a qualified tax professional about correcting it, and consider reporting the preparer to the IRS.
• Report fraud at ReportFraud.ftc.gov.

Case status (as of Nov. 6, 2026)

Defendant	Court	Status	Source
Chowan Watson, 55, Rocky Mount, N.C.	U.S. District Court, E.D.N.C., 5:26-CR-125-M	Pleaded guilty to one count of aiding and assisting in the preparation of a false tax return; maximum 36 months; sentencing expected later in 2026; restitution to IRS agreed	[1]
Angela Dickens	Not stated in release	Previously pleaded guilty per the release; sentencing status not stated	[1]

Statuses can change.

Sources

1. U.S. Attorney's Office, Eastern District of North Carolina, "Rocky Mount Tax Preparer's $3.9M Fraud Empire Crumbles, She Confesses Guilt," Oct. 28, 2026. https://www.justice.gov/usao-ednc/pr/rocky-mount-tax-preparers-39m-fraud-empire-crumbles-she-confesses-guilt

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