Paul L. Caron

Wednesday, October 28, 2009

DOJ Charges Seven With Seeking $562m of Bogus Tax Refunds

The Justice Department has filed lawsuits against seven people accused of seeking $562 million in bogus tax refunds (including one refund claim of $210 million for a single customer).  From the Department of Justice Press Release:

Under the tax fraud scheme, known as the “redemption” or “OID redemption” scheme, participants file a series of false IRS forms, including tax returns, amended returns, and Forms 1099 (including Form 1099-OID) or Forms W-2, to request fraudulent tax refunds based on phony claims of large income tax withholding. According to papers filed in these cases and earlier cases against other alleged scheme promoters, redemption scheme promoters are tax defiers who falsely tell customers that the federal government maintains “secret” accounts of money for its citizens. Promoters claim to be able to help customers access the secret funds by filing the false IRS forms.

Altogether, according to the IRS, redemption scheme participants (including customers of the defendants in the seven lawsuits filed this week) have requested a total of $3.3 trillion in fraudulent refunds.

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