Preparer Claimed Large Tax 'Refunds' Based on Phony Claims of Large Tax Withholding
WASHINGTON, Jan. 28 /PRNewswire-USNewswire/ -- A federal court has issued a permanent injunction barring Karen Liane Miller of Nashville, Tenn., from preparing federal income tax returns for others, the Justice Department announced today. U.S. District Court Judge Aleta Trauger entered the order and judgment, which also bars Miller from assisting others with preparing federal tax returns. Miller consented to the entry of the permanent injunction against her. The court had previously entered a preliminary injunction against Miller.
According to the government's filings, Miller repeatedly prepared federal income tax returns claiming bogus refunds in "astonishing" amounts, based on a tax fraud scheme known as the "redemption" scheme. The court previously found that Miller prepared and filed 41 income tax returns for customers in 2009 claiming more than $8.3 million in fraudulent refunds. The court said that the redemption scheme is based on a frivolous theory that the federal government maintains secret accounts for its citizens, and that taxpayers can gain access to funds in those accounts by issuing IRS 1099-OID forms to their creditors.
The case against Miller was one of seven lawsuits the Justice Department filed across the nation in October 2009, all of which seek permanent injunctions against tax preparers who allegedly promote the redemption scheme. The defendants in those cases allegedly prepared tax returns fraudulently requesting a total of $562.4 million in refunds.
The Internal Revenue Service catches the vast majority of fraudulent redemption-scheme tax refund claims without issuing any refund. Taxpayers who submit the claims face substantial civil monetary penalties and possible criminal prosecution.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division, thanked Justice Department trial attorney Brian H. Corcoran for handling the case, and also thanked Shauna Henline of the IRS's Small Business Self-Employed Division, who conducted the investigation.
In the past decade, the Justice Department's Tax Division has obtained more than 435 injunctions against dishonest tax-return preparers and tax fraud promoters. Information about these cases is available on the Justice Department Web site.
SOURCE U.S. Department of Justice