WRAL Investigates

Undercover video: Are Triangle tax preparers following the law?

Posted May 2, 2013
Updated May 3, 2013

— Six months after the WRAL Investigates team reported on a statewide tax fraud scheme involving suspected illegal immigrants, undercover video shot in April shows a Cary tax preparer agreeing to help a mother claim a tax credit for her children living in Mexico.

The tax fraud scheme is a $4 billion problem across the United States that involves suspected illegal immigrants getting billions of dollars in tax credits for children who don't live in America, or don’t even exist, according to the Treasury Inspector General for Tax Administration.

A Raleigh tax preparer, who asked not to be identified, said he lost numerous Latino clients this year after other local tax agencies agreed to help his clients get illegal refunds for children who don’t live in this country.

“They manipulate the system,” he said.

In previous years, the tax preparer took his clients’ word when they claimed dependents. However, under tougher IRS rules this year, he started asking for updated school or medical records to prove children lived here with the tax filers and not in another country.

“If you want to file with me, you need to give me the proof,” he said.

That demand cost his business. He says clients who counted on getting thousands of dollars in child tax credits left him for preparers willing to look the other way.

The WRAL Investigates team sent a Spanish-speaking staff member with a hidden camera to eight Triangle area tax agencies to pose as a mother who has children in Mexico. Seven of the agencies gave her accurate information and said her children must live with her to get the credit.

“If they are in another country, they will not give it to you,” one tax preparer said.

Not everyone followed the rules. At a tax office on Chatham Street in downtown Cary, the undercover WRAL staffer met with tax preparer Martin Cruz and told him that other agencies wouldn’t let her claim a credit for her children living in Mexico.

Tax preparer Martin Cruz Undercover video: WRAL staffer talks with tax preparer

“I want to put them down, but when I went to others to do them, they told me it cannot be done,” the WRAL staffer.

“Of course, the children have to be with you. But if you provide help for them, there are some that put it (down),” Cruz said, before agreeing to help with her request. "Yes, you can put them down. I'll put it down and you just put that you do provide financial help on the paperwork, and that's it. No proof is needed. Then, if you are audited, you present the correspondence that you have."

The WRAL Investigates team contacted Cruz and asked about the erroneous information he gave the WRAL staffer. Cruz said he was busy at the time and must have been confused by the woman's questions about the tax credit. He admitted that dependents must live with tax filers to be claimed and that proof is needed.

Wake Forest certified public accountant Nancy Dawkins says the IRS needs to do more to combat child tax credit abuse.

tax preparers Some tax preparers still filing fraudulent child tax credits

“It does invite fraud,” she said. “If you're filing something with the IRS, you have to be able to prove it.”

Last year, investigators uncovered more than 1,000 tax returns linked to eight addresses in North Carolina, with refunds worth more than $5 million. Agents confiscated hundreds of refund checks, lists of Hispanic names, a box of Mexican birth certificates and tax returns sent to people linked to falsified documents.

Candida Figueroa and Cathy Cisneros pleaded guilty to the tax fraud scheme. The IRS was tipped off after the U.S. Postal Service noticed a flood of “suspicious mailings from the U.S. Treasury Department appearing to contain Treasury checks” hitting the same Charlotte mailboxes, according to court records.

This year, criminal complaints accused Eli Valle and Mardoqueo Mejia-Fajardo of providing false names to obtain post office boxes in Duplin County to receive more than $2 million in child tax refunds.

Legitimate tax preparers and filers say that when others cheat, they end up paying the price.

“It's very frustrating when you want to do the right thing and you're trying to do the right thing, and you feel like you're being punished or losing business to people that are cheating,” Dawkins said.

78 Comments

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  • rushbot May 3, 7:11 p.m.

    lessismore said at 1844: "Plenty tax filers claim dependents that do not even exist.....this country needs a national sales tax and do away from all the loop holes, the exemptions, the corruption. A national sales tax makes everyone pay their fair share. Buy something...pay fed'l tax...no one files an income tax return. But, Obama Care keeps the IRS alive to make sure those of us who work pay for insurance for those that that don't want to work. The Obama world we have become accustomed to." .. .. .. ..you, sir or madam show a real lack of understanding about the effects of a national sales tax..it would force the poor to pay a higher percentage of their income as a tax..while the wealthy would pay a much lower percentage.. .. ..and as to Obama Care keeping the IRS alive..what in the world are you talking about???

  • lessismore May 3, 6:40 p.m.

    Triangle tax accountants!!!! It's happening across the country. And our incompetent government catches up 15 years later......billions and billions later...And the Obama administration wants to make all the illegals US citizens, and all their cousins, parents, grandparents, and children still in Mexico legal democrat US voting democrats.

  • imback May 3, 5:48 p.m.

    "Sorry…I thought a high profile tax cheat was relevant to an article about tax cheats. WooHoo2You

    High Profile like Timothy Geithner who "forgot" to pay his social security tax for 3 years? Or maybe Charlie Rangel? If you want to play the juvenile troll games you play everyday, we can post matching links of people in both parties who have been caught not paying their taxes, but thats not what this story is about. Perhaps people would take your posts more seriously if you didnt feel to always turn every discussion into a partisan gotcha thread.

  • 3TeensGrowinUp2Fast May 3, 5:43 p.m.

    Does this really surprise anyone? Close the bleeping borders!

  • Ripcord May 3, 4:41 p.m.

    "I thought a high profile tax cheat was relevant to an article about tax cheats." - WooHoo2You

    And you do have evidence that Romney "cheated" on his taxes, right? Like the charges against him... that kind of thing? Or is it all just in your imagination?

  • chivegas May 3, 4:30 p.m.

    Never understood why children are a tax *credit* to begin with... They cause an additional burden on public infrastructure (i.e. schools). It only encourages people to cheat the system.

    If anything, there should be an additional tax for having children.

  • Obamacare survives May 3, 4:29 p.m.

    We really could use a huge moat filled with gators to protect the border with Mexico. Let's see them cross that.

  • WooHoo2You May 3, 4:18 p.m.

    WooHoo... The article describes rampant tax fraud and all you can yammer about is Romney's horse? Really?-Ripcord

    Sorry…I thought a high profile tax cheat was relevant to an article about tax cheats.

  • Ripcord May 3, 4:00 p.m.

    WooHoo... The article describes rampant tax fraud and all you can yammer about is Romney's horse? Really?

  • ratracehwy64 May 3, 3:50 p.m.

    Let's just invade Mexico, annex them and solve the illegal immigration problem, border guard issue, and gain many many manufacturing jobs back.......Then Canada....We can be called the United States of north america

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