IRS cracks down on tax fraud

By Ed Brock

Invisible dependents and non-existent deductions are the target of a federal crackdown on tax fraud.

At least three Clayton County residents have been charged with tax related crimes in recent months.

The Internal Revenue Service says 35-year-old Kimberly Thompson of Jonesboro submitted tax forms with forged W-2 forms and taxpayer signatures.

Thompson was indicted on tax fraud charges last month.

Freddie Knowles, 57, of Ellenwood, pleaded guilty to 10 counts of preparing fraudulent tax returns for including fictitious dependants, deductions and other information in his tax forms for 1995 to 1998.

And 59-year-old Annie Bailey was indicted on Sept. 11, 2002 on two counts of willfully attempting to evade taxes in 1996 and 1997, two years the IRS says she participated in and made "substantial proceeds" in a fraudulent timber scheme.

These are some of the Georgians included in a crackdown on tax fraud by the IRS and the U.S. Department of Justice.

"We will hold those who cheat the system accountable," U.S. Attorney for the Northern District of Georgia Bill Duffey said. "The integrity and fairness of our tax system requires us to prosecute people motivated by greed who abuse the tax system."

The IRS has "made tremendous strides" in finding tax cheats, said Wendy Powner, owner of PBS Tax and Accounting Services on Main Street in Jonesboro. The tax collection agency can now make sure the names, birthdays and Social Security numbers on a given tax form match.

"Many times if you're a stranger you may know the person's name but not their Social Security number. Or you may have been able to pull their Social Security number but you don't know their birthday," Powner said. "It's a really good thing to have that extra checking point."

The IRS will know if a filer decides to leave a W-2 form off his or her tax application, Powner said. They're also getting better at finding mistakes in tax forms, something necessary to avoid situations like one in which a client of Powner's found herself.

They discovered that she had left out some things on a filing from nine years ago.

"Well the interest and penalties are outrageous," Powner said. "She owed $4,000 but by the time they get through with her it might be $48,000."

Weeding out the tax frauds is really just a matter of doing your job correctly, said Jim Babb with Liberty Tax in Stockbridge, Riverdale and Fayetteville.

"There are certain safeguards built into the system," Babb said. "We've had a couple of people we sent on their merry way when things just didn't look right."

Documentation is very important, said Gene Phillips with the Jackson & Hewett Office on Tara Boulevard in Jonesboro. Along with driver's licenses for the taxpayer and their secondary, Phillips requires Social Security cards for each dependent.

"This is where a lot of the problems come in, when they start rattling off names," Phillips said.

After a while tax preparers "get a feel" for clients who aren't being honest about their tax information, but he hasn't had a big problem with tax cheats recently.

"With the publicity the IRS has put out there they've got a lot of them scared," Phillips said.

And if something seems amiss, Phillips has a hotline direct to the IRS.

"And we will call them. We've called them on a couple of people this year," Phillips said. "I look at it like this, that's my tax dollars."

Duffey's office is also warning taxpayers to look out for preparers who promise larger refunds than other preparers, base their fees on a percentage of the refund or refuse to sign the tax return or provide the client with a copy of the return for their records.

Taxpayers should get referrals for their preparers, ask the preparer about their qualifications and make sure they can represent them in an audit. Only enrolled agents, certified public accountants and lawyers can represent someone in an audit.