WASHINGTON – The United States has sued a Chicago tax return preparer seeking to bar her from preparing any more federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Rita Augustus and her businesses, Windy City Insurance Agency Inc. and Windy City Tax Service, claim bogus tax deductions and credits on customer tax returns.
According to the government complaint, Augustus has included fabricated charitable donations, employee business expenses and other deductions on tax returns that she has prepared since 2006. For tax years 2005 through 2009, Augustus allegedly prepared more than 4,000 federal income tax returns for customers with an unusually high refund rate. The Internal Revenue Service estimates that her return preparation for those years could have resulted in as much as $20 million or more in lost tax revenue.
The government’s complaint alleges that Augustus prepared 2006 and 2007 tax returns for one customer, a supervisor at a steel mill, claiming that the customer had business losses related to a non-existent barber shop. Augustus allegedly used the address of her businesses as the location for the fake barber shop.
In the past 10 years, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website.