DOJ Sues Two Louisiana Women for Tax Fraud Scam

The Department of Justice recently filed a lawsuit in a U.S. District Court in an attempt to bar two women from preparing federal tax returns for others.

The civil injunction, filed in the Eastern District of Louisiana, alleges that Cathy Vinnett, and her daughter, Lashanda Vinnett, both of Destrehan, La., prepared federal tax returns for their customers and claimed fraudulent tax refunds, states a news release issued by the Department of Justice.

The mother-daughter team then pocketed the refund money, alleged to be worth millions, without informing their customers.

Also implicated in the suit were the tax return companies owned and operated by the Vinnetts, which included D&C Tax Service, M&C Tax Service, Remarkable Tax Service, and River Parish Tax Professionals, which at various times were located in cities throughout Louisiana and Georgia.

As tax-return preparers, both women were enrolled agents, as opposed to federally licensed tax practitioners who are able to legally represent their clients before the IRS.

The Vinnetts are accused of having claimed tax refunds based upon false telephone excise tax credits, earned income tax credits, and first-time homebuyer tax credits.

The telephone excise tax credit, which was only applicable for the 2006 fiscal year, was a credit that returned tax money to people who previously paid taxes on bundled or long distance calls, but who qualified for a refund after several federal court rulings on the issue.

Earned income tax credits are refunds offered to middle- and lower-income families, meant to lessen their tax burden. The size of the refund depends on the family income and number of children.

The first-time homebuyer credit, established in 2008, allows buyers who plan to use the home as their primary residence to claim a tax refund of up to $8,000.

According to the suit, the resultant tax harm to the government due to these bogus claims could amount to as much as $2.2 million.

The fraudulent activities may have started as early as the year 2007 when the Vinnetts founded D&C Tax Services and prepared returns for fiscal year 2006.

Tax return preparer fraud is one of the offenses included in the DOJ’s 2011 “Dirty Dozen” list of tax scams, which also include hiding income offshore and identity theft.