Penny Lea Jones shut down

[Demosthenes]

Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Tuesday, January 5, 2010
Federal Court Shuts Down Idaho Tax Preparer
Idaho Falls Woman Fraudulently Claimed Over $93 Million in Refunds for Customers
WASHINGTON – A federal court has issued a preliminary injunction barring Penny Lea Jones of Idaho Falls, Idaho, from preparing federal income tax returns for others, the Justice Department announced today. The court found that Jones promotes a tax defier scheme that claims large fraudulent tax refunds for customers. The order, entered by U.S. District Judge Edward J. Lodge, remains in effect while the lawsuit is pending.
The court found that Jones repeatedly prepared federal income tax returns claiming bogus refunds based on a tax fraud scheme known as the "redemption" scheme. The court held that Jones prepared and filed 333 income tax returns for customers in 2008 and 2009 claiming more than $93 million in fraudulent refunds. The court said that the redemption scheme is based on a frivolous theory that the federal government maintains secret accounts for its citizens, and that taxpayers can gain access to funds in those accounts by issuing IRS 1099-OID forms to their creditors.
The case against Jones is one of seven lawsuits the Justice Department filed across the nation in October 2009 that seek to shut down tax preparers who allegedly promote the redemption scheme. The defendants in those cases allegedly prepared tax returns fraudulently requesting a total of $562.4 million in refunds. Under the scheme, participants file a series of false IRS forms, including tax returns, amended returns, and Forms 1099 (including Form 1099-OID) or Forms W-2, to request fraudulent tax refunds based on phony claims of large income tax withholding.
The Internal Revenue Service (IRS) catches the vast majority of fraudulent redemption-scheme tax refund claims without issuing any refund. Taxpayers who submit the claims face substantial civil monetary penalties, and possible criminal prosecution.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked James Strong, the Justice Department trial attorney who handled the case and Shauna Henline, the IRS senior technical advisor who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained more than 435 injunctions against dishonest tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.

[Judge Roy Bean]

Any word on the criminal indictment(s)?

[Demosthenes]

FOR IMMEDIATE RELEASE TAX
WEDNESDAY, JULY 13, 2011 (202) 514-2007
WWW.JUSTICE.GOV TTY (866) 544-5309

FEDERAL COURT BARS IDAHO WOMAN FROM PROMOTING “FORM 1099-OID” TAX SCHEME

Tax Preparer Sought More Than $168 Million in Fraudulent Tax Refunds

WASHINGTON – A federal court has permanently barred Penny Jones from preparing federal tax returns for others and from promoting the use of false tax forms, the Justice Department announced today. The civil injunction order, entered by Judge Edward J. Lodge in U.S. District Court for the District of Idaho, found that Jones operated a tax preparation business using a post office box in Shelley, Idaho, and prepared more than 400 federal tax returns claiming fraudulent tax refunds exceeding $168 million.

The court also found that Jones prepared various false Internal Revenue Service (IRS) forms, including Form 1099-OID, for use in requesting refunds based on phony claims of large income tax withholding. The court order says the scheme is rooted in the long-discredited “redemption” theory which, according to its proponents, allows taxpayers to use IRS forms to access secret Treasury accounts to satisfy their tax liabilities. The court found that this theory has been “routinely rejected” by other courts, that the forms attached to tax returns prepared by Jones were “phony,” and that Jones knew her actions were fraudulent.

The court order requires Jones to provide the government with a list identifying all persons for whom she prepared federal tax returns for tax years 2005 through 2009.

Return preparer fraud and bogus refund claims based on false Forms 1099-OID are two of the IRS’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of dishonest return preparers and tax fraud promoters. Information about these cases is available on the Justice Department website.

[Judge Roy Bean]

...
The court order requires Jones to provide the government with a list identifying all persons for whom she prepared federal tax returns for tax years 2005 through 2009.
...

Nothing like finding out you have a giant target painted on your butt; I wonder how much money won't be recovered from her "client" cohorts?