This week, it was announced that mother and daughter tax preparers from Cataula, Georgia had been sentenced for their roles in filing false tax returns with the Internal Revenue Service. 47-year-old Melissa Lowe was sentenced to 24 months imprisonment and restitution of $440,000. Her daughter, 29-year-old Bianca Lowe, was sentenced to 9 months imprisonment and was ordered to pay $78,687 in restitution. Both defendants will serve one year of supervised release. Both are prohibited from acting as tax preparation agents or seeking employment in any tax related field.

Evidence presented in the case confirmed that Melissa Lowe owned and operated Priority Tax Service from 2011 to 2013. The business was located in Harris County, Georgia. Bianca Lowe served as an occasional employee. The business primarily filed federal and state income tax returns for individual taxpayers. The defendants continually filed fraudulent income tax returns designed to inflate their clients’ refunds.

The scheme involved many methods. However, the most common was to file a “Schedule C” with each return. The Lowes filed Schedule C forms with each return even when the document was unwarranted and/or unnecessary. The Schedule C form is used when the taxpayer is required to report small business gains and losses.

The Lowes frequently filed a Schedule C showing that the client had suffered a large business loss. In return, this offset the amount of tax owed and increased the client’s refund. In many cases, the Schedule C businesses were either non-existent or the losses were drastically overstated. The Internal Revenue Service discovered the scheme when it was determined that Ms. Lowe’s business was filing Schedule C returns in a volume much higher than the national average.

It is estimated that the total loss to the government was around $440,000. It was determined that most of the individual taxpayers were unaware of the fraudulent filings. Therefore, they will not be held accountable for the losses. Further details can be found here.

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