A federal court in the Northern District of Illinois has permanently enjoined two Chicago-area tax return preparers from preparing returns for others and from owning or operating any tax return preparation business in the future.
The civil complaint filed in the case alleged that Patricia Rivers, of Country Club Hills, Illinois her daughter-in-law, Ki’esha Gary, of South Holland, Illinois, and her company, Alpha II Omega Tax, prepared federal income tax returns that made false and fraudulent claims to reduce her customers’ tax liabilities and increase their tax refunds, primarily through a scheme to fabricate sole proprietorship business losses on the customers’ returns. The complaint also alleged that Rivers, Gary and Alpha II Omega inflated their customers’ tax refunds by reporting false charitable donations and exaggerated or bogus unreimbursed employee expenses, bogus rental deductions, inflated tax withholding and overstated education credits. On at least one occasion, Rivers was alleged to have falsely reported her own home address as a rental property to generate losses on her customer’s income tax return. Another customer alleged that Rivers amended a customer’s return without consent to retaliate against her by increasing her tax liability.
In an order entered on March 31, the court found that the tax loss to the government from the 2018 returns of just 38 of Rivers’ customers was $278,461 and that, given that this was “only a small number of the thousands of income tax returns prepared by Rivers,” the actual loss to the United States was higher.
The court found that Rivers repeated and continuously prepared income tax returns in a manner that violates federal law, and that because her intentional disregard for tax laws continues, a permanent bar on tax preparation activities was warranted. Thus, the Court entered a permanent injunction preventing Rivers, Gary, and Alpha II Omega Tax from preparing income taxes or engaging in tax-related business in the future.
Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. (More information can also be found here.) The IRS has information on its website for choosing a tax preparer, has launched a free directory of federal tax preparers, and offers information on how to avoid “ghost” tax preparers, whose refusal to sign a return should be a red flag to taxpayers. The IRS also has a checklist of things to remember when filing income tax returns in 2022.
In addition, IRS Free File, a public-private partnership, offers free online tax preparation and filing options on IRS partner websites for individuals whose adjusted gross income is under $73,000. For individuals whose income is over that threshold, IRS Free File offers electronical federal tax forms that can be filled out and filed online for free. The IRS has tips on how seniors and individuals with low to moderate income can get other help or guidance on tax return preparation, too.
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 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.