Chicago woman accused of fraudulent tax returns

By Alejandra Cancino
Posted Dec. 27, 2010 at 12:35 p.m.

The federal government is accusing a Chicago woman of preparing fraudulent  tax returns by faking or inflating donations to charities and business expenses.

The government says Martha A. Jones prepared about 270 fraudulent tax returns annually between 2005 and 2008.  Court documents estimate that they have led to a loss of over $5 million in revenue.

Because Jones didn’t sign the tax returns she prepared or helped prepare, the government is unsure of the exact number of fraudulent returns.

So far, the Internal Revenue Service has examined 56 fraudulent tax returns of people who said the documents were prepared by Jones, according to court documents. The government lost $262,033 in revenue from those returns.

The returns have bogus claims, such as a $7,500 deduction for charitable non-cash donations, a $250 deduction for charitable cash donations, and claim expenses that are not deductible, such as giving money to relatives.

The IRS also found fabricated or inflated unreimbursed business expenses in the tax returns.

For example, on the 2006  tax return of a truck driver, Jones claimed $27,537 business expense deductions, when the driver only had a documented $400 deduction for steel-toed boots.

Jones didn’t ask for documentation nor explained the rules on what qualifies as business expenses, instead, she fabricated the amounts, court documents say. For their part,  Jones’ clients claim they didn’t know the contributions or business expense deductions were on their tax return forms because they simply signed and mailed them.

Martha Jones said she didn’t know a lawsuit has been filed against her.

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