JUSTICE DEPARTMENT SUES TO STOP ALLEGED TAX SERVICE FOR FRAUDSTERS

The following excerpt is from the Department of Justice website:

January 18, 2012

"The United States has sued Larry Carnell Dixon Sr., seeking to bar him and his business, Dixon’s Tax Service, from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint, filed in the U.S. District Court for the Middle District of Louisiana, alleges that Dixon, of Zachary, La., prepares federal income tax returns for customers claiming fabricated and inflated business expense deductions for existing or fictitious businesses. The lawsuit alleges that Dixon fraudulently uses these fabricated business expenses to decrease his customers’ tax liabilities or increase their refunds, including refunds arising from the earned income tax credit.

According to the complaint, an Internal Revenue Service (IRS) investigation revealed that 194 of the 198 income tax returns prepared by Dixon’s Tax Service and audited by the IRS resulted in tax deficiencies. The lawsuit alleges that the tax harm caused by Dixon’s misconduct could be as much as $39 million.

The complaint also asks the court to require Dixon to provide the government with a list of all customers for whom Dixon’s Tax Service prepared returns after Jan. 1, 2006.

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. "

TAX PREPARER PLEADS GUILTY TO MAKING FRAUDULANT DEDUCTIONS

The following excerpt is from the Department of Justice website:

Monday, December 12, 2011
“Houston-Area Tax Return Preparer Pleads Guilty
WASHINGTON – Eddye Lovely of Tomball, Texas, pleaded guilty today to three counts of aiding and assisting in the preparation of false tax returns, the Justice Department and Internal Revenue Service (IRS) announced. Lovely appeared before U.S. District Judge Nancy F. Atlas in Houston.
According to the plea agreement, Lovely owned and operated a Houston return preparation business, called “The Tax Master,” at which he prepared false income tax returns that included certain false Schedule A itemized deductions that the client did not make and fraudulent Schedule C business losses that the clients did not operate.
After Lovely was indicted in April 2011 on 14 counts of aiding and assisting in the preparation of false tax returns, he persisted in the preparation of false tax returns despite a court order requiring him not to prepare any tax returns while on release in the case. According to the plea agreement, after his release, Lovely aided and assisted in the preparation of materially false 2010 tax returns for two additional clients. These tax returns were materially false in that they featured fabricated Schedule C losses for businesses that the taxpayers did not own or operate, as well as false or inflated Schedule A deductions for charitable contributions and/or job search costs.
The tax loss associated with the three counts to which Lovely pleaded guilty is $74,964. Lovely faces a maximum prison sentence of nine years and a fine of up to $750,000. Judge Atlas set sentencing for Feb. 29, 2012.
The case was investigated by IRS-Criminal Investigation and prosecuted by Trial Attorneys Tracy Gostyla and Kathryn Ward of the Justice Department’s Tax Division.”