A tax preparer on Indianapolis' west side is accused of putting false information on tax returns to inflate refunds by thousands of dollars, in some cases.
Prime Time Tax Services, at 5415 W. 34th St., offered "24-hour checks and the best refunds in the country."
Tell us your experience with Prime Time Tax Services
A tip about long lines outside the office led RTV6 to investigate why so many people were going there and why many were convinced the tax preparer would get them larger refund amounts.
Call 6 Investigator Rafael Sanchez
found that a couple of Prime Time clients have received a two-page letter from the Internal Revenue Service that says, in part, "We have received your income tax return and are holding your refund until we complete a thorough review of your return."
A representative for Bernard and Omega Chatyoka, owners of Prime Time, promised they would respond to the Call 6 Investigators, but they didn't.
In some cases, Prime Time signed up customers for the American Opportunity Tax Credit, which allows families to cut their taxable income by up to $2,500 for college-related expenses.
Lilian Villatoro, of Indianapolis, has two children ages 13 and 8. She said she soon realized that her tax return didn't add up and was surprised to receive $1,900 in college tax credits.
"They are in public school," she said. "Of course (they don't go to college). They're little."
Villatoro said she went to Prime Time Tax Services on Jan. 25 and handed in her tax forms from last year. The process took just a few minutes, Villatoro said, and a few days later, she found that she had been signed up for the college tax credit.
In Villatoro's case, the tax break boosted her refund to $5,070, twice what she normally gets. Villatoro said she was shocked by the fees the company tacked on.
"(A female employee) told me that I'm going to get $4,000," Villatoro said.
The Call 6 Investigators spoke to customers who said that once their refund check arrived at Prime Time, the company would charge up to $1,000 in fees.
Villatoro said some of her acquaintances didn't mind paying the fees because they were still getting more money than they had expected.
One woman who didn't want to be identified told the Call 6 Investigators that she went to Prime Time on Jan. 23 because others told her that she could get a big refund.
The woman has three dependent children, and Prime Time put her down for $2,326 in college tax credits, though her children aren't old enough to be in high school.
Based on the information in the return, the woman's refund was set for $6,659, but she recently received a letter from the IRS stating that her return is under review.
The woman said she went to a different tax preparer and was told her refund without the American Opportunity credit is below $4,000.
"Everything is fake," the woman said, referring to Prime Time's practices.
Ancaleto Mancillo is among those promised big refunds, but now fears receiving a temporary rejection letter from the Internal Revenue Service.
"My friends told me that they get you good money, but they don't know how they do it," Mancilla said. "They were recommended because they give a lot of money."
Even though he isn't paying any bills for college, Mancilla received $3,526 in college tax credits, inflating his return to $12,130. An independent preparer told the Call 6 Investigators that without the credit, Mancilla's refund would be about $8,000.
When the Call 6 Investigators visited Prime Time Tax Service, none of the employees wanted to take questions.
One person shouted through a closed door that returns were wrong because customers lied. A woman said the company was no longer in business, and a male employee threatened to call police.
Abuse of the American College Opportunity Tax Credit is costing taxpayers billions of dollars.
The Call 6 investigators obtained an audit from the U.S. Treasury Inspector General for Tax Administration released on Sept. 16, 2011, detailing widespread abuse of the credit. As of May 28, 2010, the office identified 2.1 million people who'd received $3.2 billion in fraudulent payments.
According to the report's breakdown, 370,924 taxpayers received about $550 million in credits for which they were not eligible, and in 250 cases, prisoners managed to illegally get the education credits.
Additionally, the audit pointed out that, "An estimated 52 percent of returns with potentially erroneous education credits were prepared by paid tax preparers, who should have been aware of the eligibility requirements."
The latest data from the IRS dates back to 2009. In that year, an IRS representative told RTV6, 4,859,005 taxpayers received a total of $3.9 billion in refundable American Opportunity Tax Credits. In 2009, 160,991 Hoosiers received $146 million from that tax credit.
When asked specifically about the affect of the fraudulent payments, the IRS provided this statement from President John F. Kennedy:
"One of the major characteristics of our tax system, and one in which we can take a great deal of pride, is that it operates primarily through individual self-assessment. The integrity of such a system depends upon the continued willingness of the people honestly and accurately to discharge this annual price of citizenship. To the extent that some people are dishonest or careless in their dealings with the government, the majority is forced to carry a heavier tax burden."
For more information about filing fraudulent tax returns, click here.
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