No Mo’ Money

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The Earned Income Tax Credit (EITC) is a refundable tax credit for low- to moderate-income individuals and families. The amount of the EITC benefit, which depends on the taxpayer’s income and number of children, provides a much-needed refund for poor families who have stretched their dollars to make ends meet throughout the year. A tax preparer located in the poorest county in the nation – Holmes County, Mississippi – ran a tax refund fraud scheme involving bogus EITC claims. She attempted to file $3.5 million worth of tax returns with the Internal Revenue Service (IRS), but she didn’t get away with it.

First of all, you have to say that the tax preparer should get credit for her creative business names – Mo’ Money, MoneyCo USA and Lady T Taxes. (Creativity aside, if you were looking for someone to prepare your taxes, how likely would you be to choose one of these businesses to share your personally identifiable information?)  Over 13 years, the owner of these tax preparation businesses prepared 550 false income tax returns for her clients in the Durant community by reporting incorrect wages, self-employment income and expenses, and education credits.

Here’s some important information for you to think about. The IRS audits less than eight of every 1,000 U.S. tax returns. However, because the Mississippi Delta has among the highest rates of income tax audits in the country, more than 11 out of 1,000 tax returns are audited – just in Holmes County. (A neighboring county – Humphreys – is the single most audited county in the nation.) I find it interesting that today’s fraudster tried to pull off her tax refund fraud scam in light of this sobering information. (Another interesting fact reported in today’s fraud article is that individuals who claim the EITC are twice as likely to be audited than taxpayers who earn $400,000.)

It’s a good guess that the owner of the tax preparation businesses promised her clients that they would get a larger return if she prepared their taxes vs. any of her competitors. (Perhaps she based her fees on how big of a return she thought she could get.) Unfortunately, her clients fell for the scam that attempted to steal more than $3.5 million from the government.

The Durant, Mississippi tax preparer who tried to pocket Mo’ Money for herself pleaded guilty to tax refund fraud and was sentenced to five years in prison for taking advantage of her clients and the IRS. In addition to serving three years of supervised release, she’ll be paying the government $135,134 in restitution. (Perhaps a better name for her company would have been No Mo’ Money.)

Today’s “Fraud of the Day” is based on an article, Tax preparer from nation’s poorest county sentenced to five years for $3.5 million in tax fraud,” published by Mississippi Today on May 2, 2019.  

Mo’ Money (a tax preparation service) did amount to mo’ problems for businesses operator Teresa Chism, who was sentenced Tuesday to five years in prison for filing fraudulent tax returns.

Under business names Mo’ Money, MoneyCo USA and Lady T Taxes, Chism manipulated information in her clients’ returns to boost their tax refunds, according to a release from the U.S. Department of Justice.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.