Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams, and the government continues in its efforts to eradicate it as such. Last year, Assistant Attorney General David A. Hubbert advised “taxpayers seeking a return preparer should remain vigilant.” The caution followed the United States’ filing of a complaint in the U.S. District Court for the Southern District of Texas to bar a Houston area tax return preparer from preparing federal income tax returns. In fact, over the past decade, the Department of Justice Tax Division has obtained injunctions against hundreds of tax preparers.

Now, on May 8, the Department of Justice (DOJ) renews that caution in an announcement that the United States filed a complaint seeking to bar nine Florida tax return preparers and their associated business from assisting in the preparing of federal income tax returns for others. 

The complaint alleges that Richard Louis, Teddy Davis, James Merrill, Daniel Ouku, Demetrius Knowles, Harold Bornelus, Joseph Garrett, Marlyne Wah, and Romeo Davis “prepared and filed thousands of federal income tax returns for customers through or in connection with the unincorporated entity known as Taxman.” 

According to the complaint, one scheme used by the defendants was to claim fraudulent Residential Energy Credits on their customers’ tax returns. Louis and Taxman also allegedly falsified and overstated business and itemized deductions on their customers’ tax returns and prepared tax returns for customers claiming the incorrect filing status.  As alleged in the complaint, defendants’ pattern of preparing returns that understate their customers’ taxes or that overstate their customers’ refunds has resulted in defendants’ customers receiving refunds to which they are not entitled. The IRS estimates that the United States has lost millions of dollars in tax revenue because of defendants’ actions.

In an effort to combat the impact of return preparer fraud, the IRS offers several resources, including information on its website for choosing a tax preparer, a free directory of federal tax preparers, and information on how to avoid “ghost” tax preparers

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with tax fraud.  If you need assistance with such a matter, please contact us today.