Government says St. Louis woman cost it millions in false tax returns

ST. LOUIS -- A tax preparer filed false returns for clients that cost the government an estimated $6.5 million, the Justice Department said Tuesday.

The civil complaint said Ella Mae Peterson -- employed at an H&R Block Tax Services office from 1984 to 2004 -- allegedly prepared false or fraudulent returns.

So far, the IRS has audited about 30 of more than 1,700 federal income tax returns Peterson filed for the 2000 to 2003 tax years. The agency said it found improper deductions on each return. All of the approximately 90 returns examined so far contained suspicious deductions, according to the complaint filed Monday in federal court in Missouri's eastern district.

The complaint projected that returns Peterson prepared for those three tax years have cost the federal treasury about $6.5 million, based on the actual tax loss average of $3,767 per returns already audited.

The government is asking that Peterson be barred from preparing federal tax returns. The Justice Department does not yet have a date for when the courts may take up the matter, said spokesman Ben Porritt.

The returns Peterson prepared allegedly contained improper deductions for fictitious or inflated charitable contributions, business and medical expenses, and inflated the amount of state and local taxes paid.

A listed number for Ella Mae Peterson could not be found.

H&R Block, based in Kansas City, Mo., issued a statement calling its training and supervision of tax preparers the best in the industry. "Should an incident such as this occur, we do our best to learn from the situation and communicate the appropriate messages to both our clients and our tax professionals," the statement said.

The company said it has cooperated with authorities.