Woman Faces Life in Jail For Claiming Fake Dependents

By August 17, 2011 Individuals

In December of 2002, Norma Coronel gave birth to one child; but that’s not what her tax return says..  Coronel was indicted on 35 counts and arrested after claiming 19 children, 18 fake dependents on her tax return.  Unbelievable we know, but this type of activity happens everyday due to the earned income credit.

She was caught by obtaining fraudulent social security numbers for each fake dependent child. The result is that she now faces $5.6 million in fines and 143 years in jail for her falsification. Aside from the social security fraud, investigators were tipped off by her claim that all 19 children were born on the same day, December 11, 2002.

While this is an extreme case, it does highlight the closer relationship that the IRS and Social Security Administration now play through computers and matching technology. We have had more than one instance where e-files have had to be corrected because children preparing their own simple return forgot to mark that someone else was claiming them. More commonly, an ex-wife or ex-husband will claim the child first, resulting in the other ex-spouse’s return being rejected.

Information returns, such as W-2s and 1099s, are another area where communication between the IRS and Social Security Administration is helping produce greater accuracy through the e-filing process. It is also making it harder for those business who try to keep up with all the regulatory compliance themselves.

We recommend hiring a payroll company to help you keep track of your employees and make sure that the correct forms are filed. We also recommend making a plan for filing dependent returns to ensure that the right person claims them. You could be missing out on some generous tax credits and exemptions if you aren’t careful.

As always if you have questions please give us a call or send us an email.