IRS Seeks to Shut Down Tax Preparer Seeking Refunds (Mainly Earned Income Tax Credits) for 99.5% of Clients
A press release from the U.S. Attorney’s Office:
JUSTICE DEPARTMENT SEEKS TO SHUT DOWN CHICAGO TAX PREPARER
Chicago Man Allegedly Falsifies Customers’ Returns to Maximize Earned Income Credit
The civil injunction suit alleges that Grant falsifies customers’ income on their tax returns, frequently by fabricating business income and expenses, in order to claim the maximum earned income tax credit (EITC) for them.
The EITC is a refundable credit available to certain low-income people.
The maximum credit in 2010 was $5,666.
Due to the method used to calculate the EITC, individuals with higher annual incomes may be entitled to a larger credit.
Some tax preparers refer to the range of earned income generating a maximum EITC as the “sweet spot.”
According to the complaint, Grant fabricated businesses and reported fake business income and expenses on his customers’ tax returns to achieve reported income in the EITC sweet spot.
The complaint alleges that Grant pleaded guilty in 2006 to one count of conspiracy to defraud the United States, based on allegations that Grant charged customers a fee for listing a false dependent on the customers’ tax returns.
The government now seeks to bar Grant permanently from preparing federal tax returns altogether.
According to the complaint, Grant’s Social Security number identified him as the paid preparer on 2,555 individual income tax returns prepared in 2011.
Of these returns, 2,543 request a refund, an extraordinarily high refund rate of 99.5 percent.
In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department .