Monday, March 14, 2005

Documents filed today in U. S. District Court for the Western District of Missouri indicate an Oronogo woman charged with preparing fraudulent tax returns during the 2003 tax year is still preparing returns for 2004 despite the charges against her.
Nearly four weeks have passed since U. S. Attorney Todd Graves asked for a permanent injunction to keep an Oronogo woman from preparing income tax returns and the government is still waiting for Carrie Shafer's response.
With tax season here, Graves filed suggestions in support of a permanent injunction and a default judgment today.
Today's filing indicates Ms. Shafer was served with the complaint on Feb. 15, "but has not answered or otherwise responded."
The government claims Ms. Shafer's business, Taxes and More, operated from her home, has been filing fraudulent tax returns. Ms. Shafer received an associate's degree in accounting from MSSC in 1992 and has been preparing tax returns since 2002, according to the complaint. Most of her customers were from Missouri, but some were from Kansas, Oklahoma, and Texas.
"Since at least September 2003, Shafer has been preparing original and amended federal income tax returns for tax years 2000-2003 that claim fictitious or inflated itemized deductions for various expenses, including medical and dental expenses, charitable contributions, and unreimbursed employee business expenses."
The government claims Ms. Shafer made up the deductions without even getting any information from her customers to back them up. "For at least one customer," the complaint said, "Ms. Shafer also claimed an inflated child-care expense credit based on child-care services that Shafer knew had never actually been provided to, or paid for by, the customer."
The complaint also says she has been showing fictitious or inflated amounts of profit from the child-care businesses of her customers, "which results in the customers receiving "Earned Income Tax Credit refunds to which they are not entitled."
So far, tax returns of 16 of her customers have been examined, today's filing said. "All of these customers' tax returns contained fictitious or inflated itemized deductions."
Because of that, the filing said, the IRS assessed more than $25,000 in additional taxes, not including interest and penalties for the 2003 tax year.
Ninety-two thousand dollars in refund claims were disallowed for those customers, according to the filing.
The problem will continue to grow, Graves indicated. "The IRS has identified over 1,000 federal income tax returns prepared by Shafer for tax year 2003. Of these, approximately 75 percent included a Schedule A (itemized deductions) and claimed a refund. The refunds claimed on these returns total over $2 million" Another 20 percent of those returns included a Schedule C (profit or loss from business, sole proprietorship), Graves said.
It is not just Ms. Shafer that has provided false information to the government, the filing indicates. "Shafer has encouraged at least one of her customers to provide false information to the IRS at an examination meeting"
The word that she was under investigation did not stop her from continuing her activities, Graves said. "Shafer has prepared federal tax returns with fictitious or inflated itemized deductions even after being notified that she was under investigation by the IRS for her tax-preparation activities. Shafer is currently preparing 2004 federal income tax returns for customers."
Without the injunction, Graves said, "Shafer is likely to continue preparing false and fraudulent federal tax returns that understate her customers' tax liabilities." The injunction is necessary, he said, to stop the government from losing a considerable amount of revenue and to keep it from having to devote "substantial resources to examining her customers and assessing and collecting their proper federal income tax liabilities."
Graves claims her lack of a response to the complaint merits the default judgment. "(Her) inaction amounts to a total failure to defend her case and warrants default judgment."
The government is not seeking money, the filing said, but just to stop Ms. Shafer.
In addition to barring Ms. Shafer from preparing federal tax returns, the court is being asked to order her to turn over all documents identifying her customers, to provide her customers with a copy of the injunction when it is issued, and allow the government to monitor her to make sure she complies with the ruling.
"The customer list will enable the IRS to examine (Ms. Shafer's) customers (thus beginning the process of recovering lost revenue) and monitor whether she prepares additional returns on behalf of these customers."
If the court doesn't require Ms. Shafer to inform her customers of the injunction, Graves said, "they may be unaware that the court has found her tax-return preparation to be illegal and that they may be liable for additional taxes, interest, and penalties."
A reader tells me that Lockwood High School graduate Whitney Scott, one of the competitors in the last edition of ESPN's Dream Job is doing more than just a weekend sports show on Jock 98.7.
Miss Scott also does sports and news on Springfield's Channel 33, where former KODE sports anchor and news director Erik Schrader is the news director.

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