Justice Department Sues to Block Alleged $23 Million Dollar Tax Fraud Scheme Operating in the Los Angeles Area
Government Complaint Says Covina, Calif., Tax Preparer Requests Huge Tax Refunds By Claiming Bogus Withholdings
WASHINGTON - The United States has sued Nyla McIntyre and her firm, Approved Financial Services Inc., seeking to bar them from preparing federal tax returns for others, the Justice Department announced today. According to the complaint filed in the case, McIntyre prepares federal income tax returns for customers claiming massive fraudulent tax refunds. The complaint alleges that one of McIntyre’s fraudulent refund requests—for a La Quinta, Calif., couple—exceeded $2.6 million.
The complaint alleges that McIntyre prepares bogus IRS Forms – including Forms 1099-OID, 1096, and Schedule B – to report bogus income tax withholding, and then requests fraudulent refunds based on the fake withholding. The complaint says that McIntyre’s scheme is part of a growing trend of filing frivolous federal tax returns and forms to steal from the U.S. Treasury.
The complaint also explains that while the Internal Revenue Service catches most frivolous refund requests before the refunds are issued, McIntyre’s scheme has actually caused the release of $1.6 million in fraudulent refunds. In 2008 and 2009, McIntyre has claimed approximately $23 million in fraudulent refunds, according to the Government.
On Sept. 9, 2009, a Sacramento court found that tax preparer Teresa Marty had been using the same scheme to generate bogus refunds for her customers, and preliminarily barred her from preparing tax returns for others.
“Taxpayers foolish enough to consider participating in the illegal scheme described in this lawsuit should consider that, in addition to risking criminal prosecution, they also risk incurring civil penalties of as much as 20 percent of the amount of their bogus refund claim,” said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. “For false claims on the scale described in this case, the 20 percent penalty could result in scheme customers losing their savings and their homes.”
In the past decade, the Justice Department’s Tax Division has obtained more than 425 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s Web site, as is information about the Justice Department’s Tax Division.