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Monday, October 25, 2010

Justice Department Sues Return Preparers in Florida and Missouri Who Allegedly Claimed More Than $70 Million in Fraudulent Tax Refunds

Two Suits Are Part of Nationwide Enforcement Effort Against Promoters of Fictitious Withholding Scam

WASHINGTON - The United States has sued Iliana Sorensen of Hialeah, Fla., and Gerald A. Poynter II of Kansas City, Mo., seeking to bar them from preparing federal tax returns for others, the Justice Department announced today. Sorensen and Poynter are both alleged to prepare tax returns claiming fictitious withholding on their customers’ returns in an attempt to claim large tax refunds.

The government’s civil injunction complaints allege that Sorensen and Poynter have prepared federal income tax returns for customers claiming more than $70 million in fraudulent tax refunds that are based on fake withholding reported on Forms 1099-OID. While the Internal Revenue Service (IRS) detects and stops most fraudulent refund claims, the complaints allege that Poynter’s and Sorensen’s fraudulent tax return preparation has resulted in more than $7 million in erroneous refunds to their customers.

According to the complaints, the scheme Poynter and Sorensen employ is part of a 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.

Customers who participate in tax fraud schemes of the type alleged in the complaints may be subject to sizeable penalties for filing returns with excessive refund claims —including a penalty equal to 20 percent 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.

Courts have barred preparers who used similar schemes in California , South Carolina , Georgia, and Tennessee from preparing tax returns for others.

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s website.

Press Release Number: 
Updated September 15, 2014