US Sues Tax Firm Over Covid Fraud, Alleged $40 Million in Losses

The Justice Department sued to shut down a Texas-based tax preparation firm on Tuesday for allegedly fabricating pandemic tax credits on the returns of its customers, causing about $40 million in tax losses.

Under the Families First Coronavirus Response Act, small and midsize employers could claim fully refundable tax credits to effectively reimburse the cost of providing Covid-related paid sick and family leave to workers. Officials told the US District Court for the Southern District of Texas that two preparers, Lowetesa Petties Dewar and Nicholas Dewar, were abusing that system by fabricating credit claims on customers’ returns.

Their business, Number ...