Fake tax refund scams on the rise as tax day looms
The Justice Department is highlighting cases where tax preparers filed for fraudulent tax refunds in a bid to discourage would-be tax cheats.
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Not all tax scams rely on falsified 1099s.Skip to next paragraph
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Using other people's names. A tax preparer in South Carolina is under investigation for allegedly obtaining taxpayer names and social security numbers for use in filing requests for tax refunds without their knowledge.
Federal investigators believe Dorothy Anderson of DL Anderson Tax Service in Hopkins, S.C., filed tax returns that generated more than $290,000 in refunds. The money was deposited in bank accounts controlled by Ms. Anderson, according to federal officials.
Jose Lares runs a tax preparation business in Garden City, Kansas, called Dinero Rapido Tax Service. Federal investigators are seeking to shut him down after discovering that he allegedly claimed dependent exemptions and filing status exemptions that his clients didn’t deserve.
The bogus exemptions cost the US government about $6,000 in lost taxes per customer – or nearly $2 million, officials said.
Misusing the home tax credit. Federal investigators in Miami have targeted two tax preparation businesses that they say allowed their customers to claim an $8,000 new home tax credit even though their clients hadn’t purchased a new home.
Complaints have been filed in south Florida against Paula Olivette Patrice of To the Max Tax Professionals and Henry Ernesto Medina of Medina Group Inc., seeking a court order to prevent them from claiming the tax credit unless a new home has been purchased.
Nonexistent 'loopholes.' Two weeks ago, a National City, Calif., tax preparer was sentenced to 65 months in prison and ordered to pay $377,468 in restitution for filing false tax returns, failing to pay taxes, and aiding in the preparation of false tax returns.
Fe Garrett ran Fe’s Tax Service and Garrett’s Tax Service. Federal agents say she failed to pay $278,000 of her own personal tax bills from 2001 to 2006. In addition, she claimed fraudulent itemized deductions, including child care deductions and real estate rental deductions, according to federal officials.
During a nine-day trial, an undercover IRS agent testified that Garrett prepared a false tax return for the agent that included similar undeserved deductions. Garrett was recorded as saying she used “loopholes” in the tax law to claim certain deductions.