Wednesday, July 30, 2014
Justice Department Seeks to Shut Down Detroit Area Tax Return Preparers
Quick Money Tax & Loan Center Allegedly Claimed Fraudulent Credits and Deductions on Tax Returns
The Justice Department announced today that it has asked a federal court in Detroit to permanently bar Brandon Lee and Tamika Lee, a husband and wife who do business as Quick Money Tax & Loan Center, from preparing federal tax returns. The civil injunction suit alleges that the Lees falsify income on customers' tax returns in order to claim false and inflated earned income tax credits (EITC).
The EITC is a refundable credit available to people who work and earn less than $51,567 per year. The maximum credit in 2010 was $5,666. Due to the method used to calculate the EITC, some people are entitled to a larger credit with a higher annual income. Some tax preparers refer to the range of earned income generating a maximum EITC as the "sweet spot." According to the complaint, the Lees reported fabricated "Household Help" income and reported fake business income and expenses on their customers' tax returns to report income in the EITC sweet spot on some returns they prepared. The complaint alleges that 99 percent of the returns identified by the Internal Revenue Service (IRS) as having been prepared by the Lees and their business in 2010 and 2011 claimed a refund, which is an extremely high rate.
The complaint also alleges that the Lees prepare returns for customers that falsely claim education credits, even though the customers did not attend school or have qualifying education-related expenses, and were thus ineligible for the credit.
Return preparer fraud is one of the IRS's Dirty Dozen Tax Scams for 2014 (http://www.irs.gov/uac/Newsroom/IRS-Releases-the-"Dirty-Dozen"-Tax-Scams-for-2014;-Identity-Theft,-Phone-Scams-Lead-List). The IRS has some tips on their website (http://www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional) for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website (http://www.justice.gov/tax/taxpress2013.htm) . An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page (http://www.justice.gov/tax/injunctions.htm) . If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details (TAX.MAIL@USDOJ.gov) .