U.S. Sues for $562M over Bogus Tax Claims

Federal authorities have filed lawsuits against seven people accused of promoting a bogus tax return scheme seeking a total of $562 million in refunds.

The Justice Department cases were filed against individuals in Los Angeles, Panama City, Fla, Salt Lake City, Nashville, Tenn., and Pocatello, Idaho.

In one case, a purported accountant sought a $210 million fraudulent refund for one customer. The IRS detects and blocks a large majority - but not all - of such refund claims. Under the scheme, individuals file a series of phony IRS forms claiming large income tax withholding. Officials say the tax preparers often falsely tell customers the government maintains secrets accounts of money for its citizens that can be accessed by filing false returns.

The latest suits are part of a Justice Department and IRS effort to crack down on $3.3 billion worth of tax fraud.

"The scope of the misconduct alleged in these lawsuits is staggering," said the Justice Department's John A. DiCicco in a statement.