The United States filed a lawsuit today to bar Barbara L. Garrett, a Chicago tax return preparer, from preparing federal tax returns for others, the Justice Department announced. The civil injunction suit alleges that Garrett, while working at multiple Chicago-area tax preparation businesses including Instant Tax Service, Preferred Financial and Income Tax Solutions, claimed fraudulent deductions and credits on her customers’ federal tax returns.
According to the complaint, Garrett prepared tax returns that falsely claimed deductions from fake businesses. In one case, the complaint alleges that Garrett prepared two tax returns for a Chicago Transit Authority bus driver that reported over $25,000 in combined losses from a non-existent transportation company Garrett asserted her customer owned. The customer did not own a transportation business, according to the complaint, or in fact any business, during the years Garrett prepared these returns.
Garrett also allegedly prepared tax returns for clients that included a number of other false or improper deductions for unreimbursed employee expenses, charitable contributions, medical expenses, childcare expenses, property taxes and education expenses. One example cited in the complaint includes a fake claim for childcare expenses which falsely identified Garrett as the childcare provider. In another example, Garrett allegedly claimed over $13,000 in fictitious medical expenses and over $2,200 in bogus property tax deductions on the same return.
Return preparer fraud is one of the IRS's Dirty Dozen Tax Scams for 2013. The IRS has tips for choosing a tax preparer on their website. In the past decade, the department's Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.