PREPARING TAX RETURNS WITH ALLEGED FRAUDULENT DEDUCTIONS AND CREDITS

FROM: U.S. DEPARTMENT OF JUSTICE

Wednesday, October 31, 2012

Federal Court Permanently Bars Mississippi Woman from Preparing Tax Returns

Columbus, Miss.-Area Tax Preparer Allegedly Claimed Fraudulent Credits and Deductions on Tax Returns

A federal court has permanently barred Cynthia Carter, a Columbus, Miss., tax return preparer, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Carter consented without admitting the allegations against her, was signed by Judge Sharion Aycock of the U.S. District Court for the Northern District of Mississippi.

The government complaint alleged that Carter, who does business as Cynthia’s Tax Service, prepared returns for customers that reported false income and expenses and falsely claimed several tax credits, including the first-time-homebuyer credit.

The complaint alleged that Carter claimed the credit on her customers’ tax returns even though the customers had not bought new homes and were ineligible for the credit, and that the Internal Revenue Service (IRS) paid out more than $900,000 in erroneous refunds to Carter’s customers as a result. The complaint also alleged that Carter claimed fabricated employee business expense deductions and earned income tax credits on her customers’ returns. According to the complaint, the IRS estimates that Carter’s fraudulent tax return preparation could have resulted in $4.25 million or more in lost revenue to the United States.

The IRS lists tax-preparer fraud as one of the "Dirty Dozen" tax scams. The Justice Department has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website.