The Justice Department has accused a former Internal Revenue Service secretary of cheating her tax prep clients and the government out of approximately $850,000.

The government filed suit in a federal district court in Chicago seeking a permanent injunction against Debra Windham to prevent her from preparing tax returns from others. Windham, who prepares returns under the business name Special Circumstances, allegedly claimed false deductions for her clients and then applied without their knowledge for refund anticipation loans in their names.

The complaint also alleges that Windham took a portion of the loan proceeds without her customers' knowledge or permission. In some cases, she allegedly prepared two sets of returns - one for the customer and another (claiming additional bogus deductions) that she filed with the IRS.

Unbeknownst to her customers, Windham allegedly pocketed the additional refund amount claimed on the filed return. The IRS estimates a tax loss of approximately $850,000 for the returns Windham prepared for tax years 2004 through 2006.

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