Financial Advice

Court Orders Return Preparation Business Owner to Pay Nearly $950,000 to the United States for Preparing Fraudulent Returns

A federal court in Orlando, Florida, has permanently barred Jason Stinson, of Longwood, Florida, from preparing federal tax returns for others and from owning or operating a tax return preparation business, following a six-day bench trial held in 2016, the Justice Department announced today. The civil order, signed by Judge Anne C. Conway of the U.S. District Court for the Middle District of Florida, also requires Stinson to disgorge to the United States $949,952.47 of funds he received from “improper and fraudulent tax return preparation.”

The court determined that Stinson owns a company called “Nation Tax Services” and had stores in four states: Birmingham and Fairfield, Alabama; St. Petersburg and Tampa, Florida; Albany and Augusta, Georgia; and Greenville and Raleigh, North Carolina. Stinson’s stores, the court found, targeted “underprivileged, undereducated poor people and earned income credit claims.”

The Earned Income Tax Credit (EITC) is a refundable tax credit for working people with low to moderate income. Eligibility depends on factors such as the amount of income, filing status, and the amount of dependents. To illustrate, the court noted that customers with earned income between $13,050 and $17,100 in tax year 2012 could receive the maximum EITC. The court found that Stinson falsified information on his customers’ returns to claim the maximum EITC amount by: “claiming bogus dependents, fabricating unreimbursed employee expenses and charitable contributions, and fabricating business income and expenses.” The court found that in many instances Stinson and his preparers fraudulently lowered a customer’s taxable income by claiming false unreimbursed business expenses in large amounts, at times more than half of what the customer earned in a given year. According to the court’s decision, “it is illogical for an individual making $35,000 a year to spend as much as half of their yearly income, around $16,000, on unreimbursed business expenses.”

Stinson’s stores charged customers in excess of $600 to prepare a single tax return, even as much as $999, sometimes without telling the customer, the court determined. Moreover, the court found that Stinson’s practice was to take his fees out of his customer’s refund, rather than charge fees upfront, meaning that “a larger refund was better for the client and better for Stinson.” Based upon the pattern of abusive claims made by Stinson and his preparers, the court ordered Stinson to pay the United States nearly $950,000 in fees he received.

“The Tax Division works with the Internal Revenue Service (IRS) to protect taxpayers from unscrupulous return preparers,” said Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division. “Court decisions like this show that those who prepare false tax returns will be stopped and will not profit from their fraudulent conduct.”

Acting Assistant Attorney General Hubbert thanks the Tax Division attorneys assigned to the case, Daniel Applegate, Sean Green, Alison Yewdell, Steven Woodliff, Jared Wiesner, and Joshua Levine, and the revenue agents of the IRS—Small Business/Self-Employed Division, who conducted the investigation.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2017and taxpayers seeking a return preparer should remain vigilant. The IRS has some tips on their website for choosing a return preparer and has launched a free directoryof federal tax preparers.

In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

This article by the Department of Justice was distributed by the Personal Finance Syndication Network.

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