SC Department of Revenue
Tax Cheats





Public Affairs Office                   Phone (803) 898-5464

Contact: Danny Brazell                  Fax (803) 898-5446






April 1, 2003

Revenue Department cracking down on tax cheat schemes

    On February 18, South Carolina Department of Revenue investigators charged a corporate security chief with filing fraudulent state income tax returns by claiming fabricated business deductions. Three weeks later, an Anderson County couple was charged by the Department with preparing fraudulent state income tax returns by submitting fake W-2 forms and claiming bogus tax deductions. On March 19, a North Charleston police officer was taken to jail after Revenue Department investigators accused her of claiming fraudulent exemptions on her W-4 withholding form to avoid paying state taxes. On March 20 a Chester resident was charged with four counts of failing to file her tax returns.

       While the Department of Revenue has always been vigilant against tax cheats, the agency has recently taken a more aggressive action to stop those who purposefully intend to cheat the government and their fellow taxpayers out of badly needed tax revenues. Since the beginning of the year, the Department has arrested eight individuals for failing to file tax returns or for submitting fraudulent tax returns. Four of the eight were tax preparers who are accused of exaggerating tax exemptions and deductions or attaching bogus W-2 forms to their clients' returns.

      One of the eight arrested claimed income taxes were unconstitutional. Arguments of this type are often marketed on the Internet as a means of avoiding taxes. These arguments have no merit and have been consistently rejected by South Carolina courts. In a recent case, a taxpayer relying on this argument was sentenced to three years in prison.

      Though the Department makes arrests of these types each year, it is possible some taxpayers may be misled or are more willing to risk filing fraudulent tax returns because of unscrupulous or incorrect advice they received at a "tax seminar," or from a friend, or from information they read on the Internet. Preparing and submitting a fraudulent tax return is a felony and a convicted person could be sent to jail for up to five years for each charge.

      Taxpayers also are cautioned to select their tax advisors and return preparers carefully. Those filing a fraudulent return could face substantial penalty and interest charges even if they are unaware the return is fraudulent. Taxpayers should never sign a tax return until they verify that the information on their return is correct. Taxpayers could face criminal prosecution if the Department of Revenue determines they willfully filed a fraudulent return.







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