Return preparer filed fraudulent tax returns

IMMEDIATE RELEASE
MONDAY, AUGUST 4, 2008
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888

FEDERAL COURT BARS MISSISSIPPI WOMAN FROM PREPARING TAX RETURNS FOR OTHERS

Cosmetologist Allegedly Obtained $3.5 Million in Fraudulent Tax Refunds For Customers




WASHINGTON – A federal court in Jackson, Miss., has permanently barred a woman from preparing federal tax returns for others, the Justice Department announced today. The court also ordered the New Hebron, Miss., woman, Hazel M. Harris, to provide her customer lists to the government and to mail copies of the court order to her customers. Harris consented to the court order.

According to the government’s complaint, Harris (who is also known as Hazel Buckley), works as a cosmetologist and has no tax training. She allegedly targeted elderly customers who receive Social Security benefits. To generate improper refunds for her customers, she allegedly reported Social Security benefits as taxable income on customers’ returns and falsely reported taxes withheld, when in fact none had been withheld; this, in turn, generated a fraudulent refund for the taxpayers.

According to the complaint, Harris claimed more than $3.5 million dollars in fraudulent refunds for her customers and prepared more than 8,000 returns since 2001. Though obligated by law to sign the returns she prepared, Harris, according to the government’s complaint, signed none of them and also failed to provide her tax preparer identification number on the returns she prepared for her customers.

The complaint states that Harris prepared three fraudulent tax returns for an undercover Internal Revenue Service (IRS) agent posing as a customer. The undercover agent gave Harris a statement showing Social Security disability income, with no tax withheld. Harris prepared returns for the agent with fabricated withholdings to generate fraudulent refunds.

“Since 2001, the Tax Division has obtained injunctions against more than 345 fraudulent tax return promoters and preparers,” said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division. “The injunction program’s goal is straightforward and simple – putting fraudulent tax return preparers out of business so they perpetrate no further harm on the nation’s tax system.”

Information about these cases is available on the Justice Department Web site, as is information about the Justice Department’s Tax Division. Information about tax scams and tax return preparer fraud can be found on the IRS Web site.



Related Documents:

United States v. Hazel M. Harris, etc.

Stipulated Judgment of Permanent Injunction

(PDF document)


Portable Document Format (PDF) files may be viewed with a free copy of Adobe Acrobat Reader


Accessibility Information

The 6694 penalty was charged in this case. http://www.usdoj.gov/tax/HHarris_PermInj.pdf You can expect that all tax fraud cases will include 6694 penalties.


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Obviously, filers of fraudulent tax returns will be prosecuted. In this case, the DOJ mentioned an "undercover agent." I have had return preparers as clients where there was an "undercover agent." The undercover agent will have an audio and/or video of the interview with the return preparer. Coverstation can be equivocal. There is a difference between giving advice to a client and telling a client what numbers to charge for items such as a charitable deduction. It is possible for the IRS to misunderstand the intent of the return preparer in making any specific comment.

The IRS is very active in auditing return preparers, and they are very intimidating when they interview clients of the return preparer, alleging that errors on the return are the fault of the return preparer. Needless to say, return preparers should not speak to the IRS in their defense on these issues without legal representation. I have seen the IRS trying to convert "negligence" into the criminal act of willfully filing a false statement in a tax return.