Bogus Refunds -- Teresa Marty and Winston Able -- 1099-OID

[Joey Smith]

FOR IMMEDIATE RELEASE TAX

THURSDAY, MARCH 5, 2009 (202) 514-2007

http://WWW.USDOJ.GOV TDD (202) 514-1888



U.S. ASKS COURTS IN CALIFORNIA & SOUTH CAROLINA

TO SHUT DOWN PROMOTERS OF ALLEGEDLY FRAUDULENT

$39.2 MILLION TAX REFUND SCAM

Tax Return Preparers Allegedly Claim Huge Fraudulent Tax Refunds

Based on Fictitious Withholding

WASHINGTON — The United States has sued tax return preparers in Placerville, Calif., and Columbia, S.C., seeking to bar them from preparing federal tax returns for others, the Justice Department announced today. According to the government complaints in the two cases, Teresa Marty of Pollock Pines, Calif., and Winston Able of Blythewood, S.C., prepare federal income tax returns for their customers that claim fraudulent tax refunds. The government alleges that Marty prepared one tax return claiming a $2.7 million fraudulent refund for one customer.

The complaints allege that Able and Marty both employ a tax fraud scheme that uses fabricated IRS Forms 1099-OID to report fictitious tax withholding on their customers’ returns and then claim refunds of huge amounts. The complaints against Marty and Able allege that the scheme is part of a growing trend among tax protesters to file frivolous tax returns and forms in an attempt to escape their federal tax obligations and steal from the U.S. Treasury.

The complaints allege that while the IRS detects and stops most fraudulent refund claims, Marty’s fraudulent tax return preparation has resulted in the IRS’s issuance of at least $6.9 million in erroneous payments to her customers. The government alleges that the total amount of fraudulent refunds requested on the returns Marty prepared or filed in 2008 was approximately $26.2 million and the total amount of fraudulent refunds requested on the returns Able prepared or filed was over $13 million.

Customers who participate in this tax fraud scheme may be subject to sizeable penalties for filing returns with excessive refund claims—including a penalty equal to 20% of the amount improperly claimed. The penalty applies even if, as usually happens, the IRS detects the false claim and blocks a tax refund. Thus a taxpayer improperly claiming a $2 million refund could be liable for a $400,000 penalty as well as other penalties and possible criminal prosecution.

“The actions announced today are another example of the government’s nationwide efforts to shut down tax fraud schemes and unscrupulous tax return preparers,” said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. “Taxpayers foolish enough to consider participating in this illegal scheme should consider that, in addition to risking criminal prosecution, they also risk incurring civil penalties that could cause them to lose their homes and their savings.”

“Taxpayers should steer clear of any situation involving fabricating tax forms or reporting fictitious tax withholding,” said IRS Commissioner Doug Shulman. “These schemes carry a high price for promoters and for taxpayers. We aggressively pursue unscrupulous tax return preparers involved in such scams. Taxpayers should remember they are ultimately responsible for what’s on their tax returns. If a promoter’s sales pitch sounds too good to be true, be sure to check it out first.”

In the last decade, the Justice Department has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.

# # #

09-190

[Judge Roy Bean]

....

In the last decade, the Justice Department has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.

# # #

09-190

"More than" 375 injunctions in ten years. That's about 37.5 per year or about three a month.

Hello? Earth to Mars. Come in Mars. Mars, do you read?

[insert white noise]

Perpetrators have a better chance of being struck by lightning than being hit with an injunction.

Doh!

[Nikki]

Department of Justice (which prosecutes these injunctions) has been too busy over the past few years to go after the TPs.

They've been spending all their time purging themselves of anyone who doesn't fit the neocon model and justifying shredding the Constitution.

[Judge Roy Bean]

Department of Justice (which prosecutes these injunctions) has been too busy over the past few years to go after the TPs.

They've been spending all their time purging themselves of anyone who doesn't fit the neocon model and justifying shredding the Constitution.

Sorry, I don't buy it. Way too politically-convenient an explanation.

It's not about politics, it's about objectives. If the objective is to diminish behavior such as exhibited by these 1099-OID perpetrators, then there needs to be more than a press release two or three times a month about filing for an injunction or a getting a conviction.

The message isn't getting out. And the complexity of tax law only makes it easier for the scammers.

[jg]

The complaints allege that while the IRS detects and stops most fraudulent refund claims, Marty’s fraudulent tax return preparation has resulted in the IRS’s issuance of at least $6.9 million in erroneous payments to her customers

There you have it !

This procedure is not quite ( about 2/3 ? ) as legitimate as the CtC filings based on the "evidence" of the refunds it has generated.

And if they had only been able to get that $2.7 million claim paid it would have been near equally proven (aka THE TRUTH) .

[Ragnar]

In the last decade, the Justice Department has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.

"more than 375"?

Am I the only one who hates these kind of statements? Is "more than 375" 377 or 376 or even 4,000? And if it is more than 375, why not just write down what it really is?

I mean, really, doesn't the Justice Department itself know the real number?

[Judge Roy Bean]

In the last decade, the Justice Department has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.

"more than 375"?

Am I the only one who hates these kind of statements? Is "more than 375" 377 or 376 or even 4,000? And if it is more than 375, why not just write down what it really is?

I mean, really, doesn't the Justice Department itself know the real number?

With apologies to Dave Barry, allow me to put on my "Mr. Language Person" hat:

It's a common editorial style used when greater specificity doesn't add substantive value to a press release. "More than...." "Nearly...." "Under...." etc., and rounding also keeps minor numerical errors from being published, particularly when something like "the last decade" is used instead of a specific time frame.

It's not testimony, Ragnar; it's a news blurb.