July 23, 2013
July 23, 2013 — Tax fraud is a significant drain on federal coffers. The IRS Whistleblower Office, created by the Tax Relief and Health Care Act of 2006, helps the government fight fraud by providing a means for authorities to respond to tipsters and informants with information about tax fraud. Insiders who collaborate with the IRS by providing unique information may be eligible for a financial reward of 15 to 30 percent of the total amount recovered, depending on certain factors.
The Justice Department has asked an Indiana federal court to stop Cynthia Hawk of Gain Tax Services from preparing any more tax returns. The government alleges that she does not comply with the due diligence requirements on tax preparers when they claim an earned income tax credit (EITC) on clients’ income tax returns. The government also alleges that Ms. Hawk falsified the amount of her clients’ incomes by fabricating businesses and reporting false income to claim the maximum EITC.
The government alleges that Ms. Hawk prepared more than1,500 tax returns between 2009 and 2012, and the refund rates for those returns were allegedly 96 to 99 percent. She is also accused of claiming fraudulent education credits on client tax returns in cases where the clients had no qualifying education expenses.
Ms. Hawk’s case is, unfortunately, not unique. In the past decade alone, the Department of Justice Tax Division has obtained injunctions enjoining hundreds of tax-return preparers from preparing tax returns for others.
Insiders with knowledge of tax fraud can be important allies with the IRS. Before they collaborate with the government, however, whistleblowers should talk to an experienced lawyer to gain insight on the process and to better understand their rights. Waters & Kraus’ financial fraud attorneys work every day with tipsters. Contact us by email or phone our attorneys at 855.784.0268 to learn how Waters & Kraus can assist you in this process and safeguard your rights.
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