Port Orchard, Washington-based Pat's Accounting Inc. was raided by the Internal Revenue Service on one of the busiest days of the year for accountants, April 15. The IRS was acting on information provided by a former employee that Richard Peirce, son of the owner of Pat's, was intentionally preparing and personally benefiting from fraudulent income tax returns.
The IRS investigation centers around a tip that Mr. Peirce was helping clients claim erroneous dependency exemptions for children or foster children which qualified the clients for tax reductions or refunds from the Earned Income Tax Credit, then sharing in the tax benefits with the clients. Mr. Peirce pleaded guilty earlier this year to identity theft and three counts of forgery.
The IRS examined 30 such returns and estimates the false exemptions on these returns cost the government more than $85,000. It is not yet known how many other returns may have been filed using the dependent scheme.
Pat's Accounting Inc. has been allowed to reopen, although the IRS investigation continues. The firm was in the news two and a half years ago when a woman associated with Pat's was arrested and accused of first-degree arson after she was linked to a box of burning papers found in the smoke-filled accounting office.