Woman Pleads Guilty to Tax Violations

On April 13, 2010, PATSY D. BAKER entered a plea of guilty to one (1) count of aiding and assisting the filing of a false return in violation of Title 26, United States Code, Section 7206(2) in the Middle District of Georgia.

The defendant will be sentenced before the Honorable C. Ashley Royal, Chief Judge of the United States District Court for the Middle District of Georgia. The charge of aiding and assisting the filing of false returns carries a possible maximum sentence of three (3) years' imprisonment, and lor a possible maximum fine of $250,000.00.

Baker held herself out to the public as a tax preparer, and was the owner and operator of Elite Tax Service. Baker operated her tax refund preparation business out of a restaurant known as Kazzmo's, located in Eatonton, Georgia.

The defendant falsely represented to the Internal Revenue Service that the information contained in the tax returns for various taxpayers was accurate, when in truth and fact as the defendant well knew, the information contained therein was false. Such false information included representations of fictitious employment. The false information made it appear that the various taxpayers were entitled to larger income tax refunds than would be the case had the returns been truthfully and accurately completed. From on or about November 26, 2003, through on or about September 5, 2006, Baker did aid and assist in the preparation and presentation to the Internal Revenue Service of fifteen (15) Income Tax Returns Forms, 1040EZ, 1040A, and 1040, which were fraudulent and false as to material matters, in that the returns represented that said taxpayers were entitled to larger income tax refunds than would be the case had the return been truthfully and accurately completed, wherein said taxpayers claimed $46,398.13.

The charges against Baker arose from an investigation conducted by the Internal Revenue Service - Criminal Investigation Division, Federal Bureau of Investigation, and the Georgia Bureau of Investigation. The prosecution was handled by Assistant United States Attorney Harry J. Fox, Jr.

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Justice Department Seeks to Shut Down Georgia Tax Preparer

/PRNewswire/ -- 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 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.

"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."

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