Most people think of tax fraud as hiding income from the IRS, but thanks to the earned income credit, some folks fraudulently overstate their income. A little wage or self-employment income can lead to a nice government check at the bottom of the wage scale.
A northeast Iowa preparer has learned the hard way that it’s just as illegal to commit tax fraud by overstating income as by understating it. A federal judge recently sentenced Yoshida Ford of Waterloo to 30 months for EIC fraud. Ms. Ford pleaded guilty to falsifying two returns – her own and one other – but admitted that she had prepared many other false returns at sentencing.
The Moral? Refundable tax credits like the EIC are a massive temptation to cheat. You can bet that every return Ms. Ford prepared has gotten special attention from IRS.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to
[...] taxpayers. The higher exemption could replace the Iowa Earned Income Tax Credit, which is rife with fraud and a poverty trap for the working [...]