Tax preparer with a secret

GRAND RAPIDS, Mich. (WOOD) - Four women were co-workers with another woman who was branching out into a new career as a tax preparer. She said she could get them a bigger refund than they could on their own or from another preparer.

Now, the women owe thousands of dollars to the IRS and all say it's their tax preparer's fault.

"Her estimate was maybe $1300 or $1500 more than where I normally go," Latoyia McLaurin told Target 8 investigators. "So who's not going to go with the higher place?"

"We went with her to get a decent refund," said another former co-worker, Rebecca Terfa.

They were happy because their new preparer, Nora Dale Hudson, did get them bigger refunds for 2009 and 2010.

Until they heard from the IRS.  

"Back in 2011 I received a letter from the IRS stating I owed about $2,500 back," Terfa said.  

Another woman, Juana Ramirez told Target 8 she owes $2,900, while Megan Austin is on the hook for $3,600.

The women say Hudson put items in their tax returns they were not aware of nor approved, and they did not know what had happened until they heard from the IRS.

"She inflated the federal tax withholding, so whatever my job took out she added a thousand or $1,500," said Terfa.  Ramirez said the preparer "gave me a school credit. I haven't been in school."

"The IRS felt like it was our responsibility to know what our tax preparer is doing," McLaurin said. "But in our defense, that's why we hire somebody to do our taxes. We don't know."

The women say they didn't bother to check the detail in their tax documents, assuming Hudson prepared them correctly.

"How many people are going to think to say, 'Hey, wait. Before I leave here let me look at every line to see,'" McLaurin told Target 8.

The women were in the dark about something else, too. While Hudson was doing their taxes, their preparer was wanted by the law.

Nora Dale Hudson has a couple of minor felonies on her record for retail fraud, plus a couple other cases of giving false information to the police. Since 2005, there has been a warrant out for Hudson's arrest when she failed to complete terms of her probation.  

Target 8 found her listed on the Michigan Department of Corrections website as a probation absconder.

When Target 8 went to the tax office where she worked - Tax Connection Worldwide on Eastern near Burton SE - she wouldn't speak in person. Hudson did return a phone call, and in that conversation said she "did not do anything maliciously to bring them harm" and that "she may have made a mistake."

Hudson said her criminal past "has nothing to do with their income taxes."  

She also denied she was an absconder from probation.

Target 8 Investigators checked with Department of Corrections officials, who confirmed she was a parole absconder.

Then they asked, "Where is she?"

Within a couple of hours a fugitive task force arrested Hudson at her job.  

She spent a week in the Kent County jail before she could see a judge. She pleaded guilty and apologized to the court "for not obeying and completing my probation as I was ordered to do."

The judge let her go without further penalty because she had finished paying restitution and has not been in trouble recently.

But Tax Connection Worldwide, operated by Grand Rapids attorney John Beason, said it fired her from her position as "an independent contractor."  

Company officials wouldn't talk on camera.  But the company said it had tried to talk to the seven Hudson clients who had complained, but only one -- Latoyia McLaurin -- would meet with them.  

McLaurin told Target 8 she wanted help from the company in paying the IRS bill but didn't get it.  

"At the end they just gave me their two business cards and that was it. So, the others felt like there's no need to meet," she said.

The IRS only recently began requiring tax preparers to register and take a minimum proficiency test.  But even a convicted felon can become a tax preparer.  The IRS says it is considering some rules about criminal background.

An IRS web page advises taxpayers how to choose a preparer and avoid fraud. That advice includes being cautious of preparers "who claim they can obtain larger refunds than other preparers."   

Or as a now more experienced McLaurin puts it: "everything that sounds good is not good."

Even the Grand Rapids Police Department hears about preparer fraud every year.  The complaints usually involve the preparer stealing the taxpayer's refund or their identitity.  But the local police have no access to tax information and can do nothing about that kind of fraud. They pass the complaints on to the IRS.

For her part, Rebecca Terfa said from now on she is going to be more vigilant about what her tax preparer is doing and check their work.  

"Read them item for item to see what they're doing and to make sure it's proper and complete. I cannot afford another mistake like this."

GRAND RAPIDS, Mich. (WOOD) - A Grand Rapids woman asked a family friend to prepare her taxes. Not only did the friend prepare the taxes, she falsified some numbers to get a $6,000 refund - instead of the legitimate $2,000 - then stole the refund.

"She had it deposited into an account," the woman told Target 8 investigators. "Whose account it was, I'm not sure."

Now the IRS wants the victim to pay back the bogus portion of the refund she never got -- about $4,000.

She reported the scam to the Grand Rapids Police Department, but nothing happened.

"Many times these people call the police because it is a fraud, but it is not a fraud we can assist them with," said GRPD Sgt. Stanley Lis. "Local police can't access your tax records. We take some of the reports but not all of them, because literally there's nothng that we can do but refer them to the IRS."

That's why the GRPD wants people to know the risks to avoid being scammed. Lis said the most frequent complaint they get is about preparers stealing refunds.

But that's not all.

"The problem comes in when the person that does the taxes either steals your identity and commits some kind of fraud afterward," he said.

The IRS warns taxpayers to avoid preparers who base their fee on a percentage of the refund and to consider whether the preparer is likely to be around to answer questions if the IRS finds a problem.

Sgt. Lis said it is extremely hard to protect yourself against preparer fraud.

"You go to an expert because you need their assistance. If you knew the answers you wouldn't need an expert."