A Mother and daughter, in Cataula, Georgia, was sentenced to time in prison for filing false tax returns with the IRS. Melissa Lowe (mother) was sentenced to 24 months in prison, and Bianca Lowe (daughter) was sentenced to 9 months in prison.
The evidence showed that from 2011-2013, Melissa Lowe owned and operated Priority Tax Service in Cataula, Harris County, Georgia. Bianca Lowe was an occasional employee of the business. This business primarily was engaged in filing federal and state income tax returns for individual taxpayers. The Lowes engaged in a sustained practice of filing fraudulent income tax returns designed to inflate their customers’ tax refunds.
While the scheme was perpetrated in several ways, the most common method used by the Lowes was filing a “Schedule C” with each return, even when such a filing was unwarranted and/or unnecessary.
A Schedule C is filed when a taxpayer must report small business gains or losses; the Lowes routinely would file a Schedule C showing that their client sustained large business losses, which offset the amount of tax owed, and therefore increased the tax refund to the client. In most cases, the Schedule C businesses were either non-existent or their losses were drastically overstated.
The scheme was discovered when the Internal Revenue Service (IRS) realized that Ms. Lowe’s business was filing Schedule C returns in a volume that was drastically higher than the national average for such businesses.
As a result of this scheme, the total loss to the government was estimated at $440,000. Most of the individual taxpayers were unaware of the fraudulent filings, and will not be held accountable for the losses.