The Justice Department filed a civil injunction suit for the case of tax preparation fraud in the United States District Court for the Northern District of Texas today, seeking to permanently prohibit Mayuen K. Ajak, Yier B. Deng, Bol C. Guot, Gabriel M. Kuot, and Golden D4 Heart Tax Services LLC from owning or operating a tax preparation business and filing tax returns. The case also asks the court to order the defendants to repay the return preparation fees they received by participating in tax preparation fraud. This action demonstrates the government’s commitment to combating tax fraud and protecting taxpayers from unethical activities in the tax preparation business.
According to the lawsuit, Ajak, Deng, Guot, and Kuot established Golden D4 Heart Tax Services LLC in Texas in 2018. They run Texas, Missouri, Nebraska, and Arizona tax preparation centers under Golden Heart Tax Service LLC.
What is Tax Preparation Fraud?
Tax preparation fraud refers to a broad variety of misleading methods used by unscrupulous persons or companies involved in the preparation and filing of tax returns. At its heart, tax preparation fraud is defined as the purposeful manipulation of financial information with the intent of dodging taxes, receiving greater refunds, or obtaining tax benefits illegally.
One typical type of tax preparation fraud is the purposeful underreporting of income. This can take many forms, including omitting to record money obtained through self-employment, rental properties, investments, or other sources. Individuals conceal income to reduce their tax bills, robbing the government of legitimate tax revenue.
Similarly, exaggerating deductions and expenses is another method used in tax preparation fraud. Taxpayers may fabricate or exaggerate deductions for charitable contributions, business expenses, or medical charges to reduce taxable income and artificially lessen their tax liabilities.
In essence, tax preparation fraud undermines the tax system’s foundational ideals of equality and compliance. Efforts to detect, prevent, and prosecute such fraudulent actions are critical to maintaining the integrity of the tax system and ensuring that all taxpayers meet their duties fairly and honestly.
Exposing Tax Preparation Fraud and Deceptive Practices
According to the complaint, the defendants, as well as individuals operating in concert with them or at their direction, committed tax preparation fraud by creating and filing tax returns that erroneously increased customers’ refunds. These acts were meant to defraud both taxpayers and the government, with the defendants benefiting from exorbitant, often hidden preparatory costs. This practice harmed both clients and the Treasury, resulting in underreported income and unpaid taxes. According to the complaint, the IRS believes that the defendants’ tax preparation fraud might cost the United States more than $10 million, highlighting the considerable financial impact of their misleading activities on the tax system’s integrity.
The complaint alleges numerous fraudulent practices used by the defendants and their collaborators to unlawfully manipulate clients’ tax returns and inflate their refunds, including:
- False claims for the earned Revenue Tax Credit
- Establishing fictional businesses and claiming revenue and expenses
- Making fraudulent claims for fuel tax credits
- Created COVID-19-related tax credits
- Making false claims for educational credits
Conclusion
Taxpayers looking for a return preparer should be wary of unscrupulous tax preparers who engage in fraudulent tax preparation. The IRS provides useful information on its website to help individuals choose a professional tax return preparer, including advice on what credentials and qualifications to look for. Furthermore, the IRS has created a free list of federal tax preparers to help taxpayers identify reliable practitioners.
Over the last decade, the Justice Department’s Tax Division has taken considerable action against hundreds of dishonest tax preparers who engaged in tax preparation fraud. Details concerning these cases, including the injunctions obtained, are easily accessible on the Justice Department website. To increase openness, an alphabetical list of individuals and firms forbidden from preparing returns and advocating tax methods is available. If anyone suspects that an enjoined individual or company is breaking an injunction, they should immediately call the Tax Division with any relevant information, thereby contributing to the ongoing fight to prevent tax preparation fraud and defend taxpayers’ interests.
Tax preparation fraud is a serious threat to both the government and honest people. Aside from the financial losses incurred by the government, it undermines public belief in the fairness and efficacy of the tax system. Individuals who commit tax preparation fraud may face serious penalties, including civil penalties, criminal accusations, fines, and imprisonment.
