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Detroit tax preparer accused of falsifying client income to maximize Earned Income Tax Credits

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Posted by AccountingWEB in Tax, Watchdog, Income Tax, Bad Guys News on 09/21/2011 - 11:21

The United States has sued Crystal Ireland and her business, Master Mind Preparation, to bar them from preparing tax returns for others. According to the government complaint in the civil injunction suit, Ireland, who resides in Detroit, allegedly fails to comply with due-diligence requirements imposed by federal law on tax return preparers who claim the earned-income tax credit (EITC) on their customers’ tax returns. The suit also alleges that Ireland falsified her customers’ income in order to claim the maximum EITC for them.

The EITC is a refundable tax credit available to certain low-income individuals. Due to the method used to calculate the EITC, individuals with higher annual incomes may be entitled to larger credits, up to a certain point. According to the complaint, Ireland fabricated businesses and reported fake business income on her customers’ returns to obtain larger credit amounts.

The complaint alleges that the Internal Revenue Service (IRS) previously penalized Ireland for failing to comply with the due-diligence requirements, yet a follow-up investigation revealed continuing failures and fraudulent claims. The complaint also alleges that, of the returns prepared by Ireland and claiming the EITC for tax years 2007 through 2009 that the IRS examined, the IRS reduced or disallowed the EITC claim on 93 percent of those returns.

Source: U.S. Department of Justice

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Gail Perry, CPA
Editor-in-Chief, AccountingWEB
editor@accountingweb.com

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