Department of Justice Seal Department of Justice
FOR IMMEDIATE RELEASE
FRIDAY, OCTOBER 2, 2009
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888

JUSTICE DEPARTMENT SEEKS TO SHUT DOWN GEORGIA TAX PREPARER

Marietta Tax Preparation Firm Allegedly Claimed Huge Fraudulent Refunds Based on Fictitious Tax Withholding


WASHINGTON – The United States has sued a tax return preparer in Marietta, Ga., seeking to bar him from preparing federal tax returns for others, the Justice Department announced today. According to the Government complaint, Robert Knupp of Marietta prepares federal income tax returns for customers, claiming large fraudulent tax refunds. Court papers filed in the case allege that Knupp prepared a tax return in which he claimed a fraudulent refund for one customer of more than $2 million.

The suit alleges that Knupp employs a tax fraud scheme that relies on false IRS Forms 1099-OID claims to report fictitious tax withholding on his customers’ returns and then claims refunds of huge amounts. The complaint further alleges that the scheme is part of a growing trend among tax defiers to file frivolous tax returns and forms in an attempt to escape their federal tax obligations and steal from the U.S. Treasury.

While the Internal Revue Service (IRS) detects and stops most fraudulent refund claims, Knupp’s fraudulent tax return preparation has resulted in the IRS’s issuance of over $65,000 in erroneous refund payments to his customers. The government alleges that the total amount of fraudulent refunds requested on the returns Knupp prepared or filed in 2009 was approximately $11 million.

Customers who participate in this tax fraud scheme may be subject to sizeable penalties for filing returns with excessive refund claims—including a penalty equal to 20% of the amount improperly claimed. The penalty applies even if, as usually happens, the IRS detects the false claim and blocks a tax refund. Thus a taxpayer improperly claiming a $2 million refund could be liable for a $400,000 penalty as well as other penalties and possible criminal prosecution.

“Taxpayers should report any tax preparer who suggests reporting fictitious tax withholding on a tax return by following instructions available at www.irs.gov,” said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. “These schemes carry a high price—steep civil penalties and, where appropriate criminal prosecution—for preparers who promote them and for their customers who sign false tax returns.”

In the last decade, the Justice Department has obtained injunctions against more than 425 tax return preparers and tax fraud promoters. Information about these cases is available on the Justice Department Web site.

Related Documents:

  United States v.
  Robert L. Knupp, etc.

 

 

 

 

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09-1068