WASHINGTON – A federal court in the Middle District of Louisiana has permanently barred Cynthia Peters and Melissa Edwards from preparing federal tax returns for others, the Justice Department announced today. According to the civil injunction suit, Peters, Edwards and their business, Jasmine’s and Melissa’s Tax Service, prepared tax returns for their customers claiming fraudulent tax refunds based on improperly claimed earned income tax credits.
The suit alleges that Peters and Edwards, both of Baton Rouge, La., prepared tax returns that claimed fraudulent refunds by fabricating their customers’ income and creating bogus losses and expenses so that the customers would supposedly qualify for the earned income credit. The pair also allegedly manufactured bogus losses and expenses for fictitious businesses so that their customers could claim larger refunds. The lawsuit alleges that their misconduct caused over $7 million in harm to the government.
According to the government complaint, the two women previously pleaded guilty to willfully aiding and assisting in the preparation and filing of false tax returns. Peters was sentenced to 27 months in prison and ordered to pay $76,908 in restitution to the Internal Revenue Service (IRS), and Edwards was sentenced to 30 months in prison and ordered to pay $56,040 in restitution to the IRS.
Filing false tax forms, including forms with bogus losses, is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website.