Frederic Anthony McMillian, of Fayetteville, was charged with 25 counts of aiding and assisting in the preparation of fraudulent tax returns. McMillian is being held in the Wake County Jail on a $250,000 bond.
Investigators said an old-fashioned tip led them to the latest case and they expect to make more arrests soon.
"It's a growing problem in North Carolina. We are expending a significant amount of resources investigating these types of crimes," said Tom Dixon, a criminal investigator with the state Department of Revenue.
Investigators said tax cheats can just go to any office supply store and buy blank W-2 forms. Criminals find out employer identification numbers from legitimate companies. They, then, fill out the W-2 forms as if they are actual employees entitled to tax refunds of anywhere from $500 to $2,000.
With the rapid growth of electronic filing, some of those fake returns slip through the system undetected, but investigators said a person can be prosecuted as well as face civil penalties.
The Department of Revenue is now looking for ways to keep similar schemes from exploiting the tax system. Investigators said everyone pays the price for fraudulent tax schemes.
"The taxpaying public is the victim in this case," Dixon said.
The federal goverment reports about $280 billion in uncollected taxes.
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