Feds nab former IRS employee in tax prep scheme

The former Internal Revenue Service secretary prepared tax returns for Chicagoans claiming false deductions, filled out refund anticipation loans in the customers' name, and then took a portion of the loans without permission-- according to charges brought by the Justice Department today.

The US District Court for the Northern District of Illinois complaint says Debra Windham ran a for-profit business, Special Circumstances, located at 9717 South Green Street in Chicago, where she repeatedly falsified expenses and deductions on the tax returns. She allegedly used the falsified returns to apply for Refund Anticipation Loans and used part of the proceeds to pay herself an extra fee for her tax preparation services. She then gave the remainder to her customers as their "refund."

The IRS estimates a tax loss of approximately $850,000 for the returns Windham prepared for tax years 2004 through 2006. Ironically, Windham previously worked for the Criminal Investigation Division of the IRS.

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