The Justice Department has taken action against a California tax return preparer, filing a civil complaint in the U.S. District Court for California’s Eastern District. The complaint targets Maria Guitron, operating under the alias Maria Lopez, and her business, Angel’s Bookkeeping & Tax Service, based in Modesto. The aim is to restrain Guitron from owning or operating a tax preparation business and from preparing federal income tax returns for others.
Persistent Fraudulent Activity by Guitron Despite IRS Warnings
Allegations against Guitron and Angel’s Bookkeeping & Tax Service are severe. The complaint asserts that they have consistently misrepresented clients’ tax liabilities by falsifying businesses, inflating expenses, and exaggerating deductions for child, dependent, and education expenses. Shockingly, despite receiving at least 11 letters from the IRS between 2011 and 2019 regarding issues with prepared tax returns, Guitron allegedly persisted in this fraudulent activity. Moreover, she was fined $23,000 in 2015 for violating due diligence requirements concerning tax credit eligibility for clients in 2013 and 2014. Despite warnings and fines, Guitron and her business purportedly continued filing thousands of false tax returns annually.
Magnitude of Fraud: Impact on Tax Revenue
The gravity of the situation becomes clearer when examining the IRS’s findings. An analysis of tax returns from 2019 to 2023, coupled with interviews with a random sample of 51 Angel’s Bookkeeping & Tax Service customers from the 2019 tax year, revealed that 38 of these customers had returns understating their tax liabilities. This resulted in a staggering $103,474 in lost tax revenue to the United States from these returns alone.
Extrapolating this data, it’s estimated that since 2019, Guitron and her business have filed over 2,000 false tax returns annually, potentially resulting in millions of dollars in lost revenue each year. Additionally, Guitron’s actions not only defrauded the government but also exposed her clients to penalties and interest for tax underpayments.
Statement from Deputy Assistant Attorney General
Deputy Assistant Attorney General David A. Hubbert, from the Justice Department’s Tax Division, announced the complaint. He emphasized the seriousness of return preparer fraud, which ranks among the IRS’ Dirty Dozen Tax Scams. Taxpayers are urged to exercise caution when selecting a preparer, with the IRS offering guidance on choosing a reputable preparer and maintaining a directory of federal tax preparers.
Precautions for Taxpayers: Choosing a Reputable Preparer
This case is not an isolated incident. Over the past decade, the Justice Department’s Tax Division has pursued numerous cases against unscrupulous tax preparers. The department has obtained injunctions against hundreds of such individuals, seeking to protect taxpayers and uphold the integrity of the tax system. Information about these cases, as well as a list of enjoined individuals and businesses, is available on the Justice Department’s website.
The Justice Department’s Ongoing Efforts Against Tax Preparer Fraud
Beyond the case of Maria Guitron, the Justice Department has pursued numerous prosecutions against tax preparers engaging in fraudulent activities across the United States. For instance, in one notable case, a tax preparer was found guilty of identity theft, unlawfully using clients’ personal information to file fraudulent tax returns and claim illegitimate refunds. This not only defrauded the government but also exposed innocent taxpayers to potential financial and legal repercussions.
Notable Cases: Examples of Tax Preparer Fraud Prosecutions
Moreover, the department has targeted tax preparers involved in schemes to evade taxes or assist clients in evading their tax obligations. These schemes often entail elaborate arrangements designed to conceal income or assets from the IRS, undermining the integrity of the tax system and causing significant revenue losses.
Each of these cases underscores the Justice Department’s commitment to holding tax preparers accountable for fraudulent behavior and protecting taxpayers from exploitation. By prosecuting those who engage in deceptive practices, the department aims to maintain the integrity of the tax system and uphold public trust in fair and equitable tax administration.
Taxpayers who suspect violations of injunctions or encounter suspicious tax preparers are encouraged to report their findings to the Tax Division. By remaining vigilant and reporting fraudulent activity, taxpayers play a crucial role in safeguarding the integrity of the tax system and protecting themselves from financial harm.
