TAX PREPARER WITH TOO MANY REFUNDS SHUT DOWN

FROM:  U.S. DEPARTMENT OF JUSTICE 

Wednesday, July 31, 2013
Justice Department Shuts Down Indiana Tax Preparer

The Justice Department announced that yesterday, a federal district judge in Indianapolis permanently barred Cynthia Hawk, who operates Gain Tax Services, from preparing federal income tax returns for others.  Hawk consented to the entry of this injunction.

The government’s complaint alleged that Hawk prepared at least 1,501 returns from 2009 through 2012, and that returns Hawk prepared claimed refunds at an unusually high percentage, ranging from 96 to 99 percent during these years. The government alleged that Hawk failed to comply with due-diligence requirements imposed by federal law on tax preparers who claim the earned income tax credit (EITC) on customers’ income tax returns.  Because Hawk failed to comply with these due-diligence requirements, in 2011 she was penalized by the Internal Revenue Service (IRS) . When the IRS performed a follow-up investigation in 2012, as it routinely does, the complaint alleged that it again found ongoing failures and fraudulent claims by Hawk.
         
The complaint also alleged that Hawk claimed education credits on her customers’ tax returns, when the customers did not actually have any qualifying education expenses.  Hawk also allegedly falsified customers’ income in order to claim the maximum EITC for them.

 The complaint alleged that Hawk’s repeated conduct of preparing returns that understated her customers’ liabilities based on bogus credits or fabricated income or deductions was sufficient for the court to prohibit her from preparing federal tax returns.
         
In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters.