WASHINGTON – The United States has asked a federal court in Fresno, Calif. to bar David Meals from preparing federal income tax returns for others, the Justice Department announced today. During last year’s tax filing season, Meals managed Jackson Hewitt’s tax preparation franchise in Hanford, Calif. Jackson Hewitt, a franchise operation headquartered in Parsipanny, N.J., is the nation’s second largest tax preparation service company.
The government’s complaint alleges that during that time, Meals, a former IRS employee, personally prepared or supervised other Jackson Hewitt employees who prepared 105 federal income tax returns falsely claiming tax exemption for casino-gaming proceeds paid to members of the Tachi Yokut Indian Tribe. The complaint states that the returns improperly sought more than $826,000 in tax refunds. According to the suit, the Hanford office prepared 40 of the improper returns, and Meals falsely advised employees he supervised that Native American casino distributions are exempt from federal tax.
Like all U.S. citizens, Native Americans are subject to federal income tax on all earnings they receive unless there is express language in a statute or treaty exempting the income from taxation. The federal Indian Gaming Regulatory Act expressly requires tribes that distribute gaming proceeds to their members to advise the recipients that the distributions are taxable.
“People who prepare fraudulent tax returns expose themselves and their customers to the risk of civil penalties and criminal prosecution,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The IRS and Justice Department are working diligently to stop their activities.”
This is the second injunctive action brought this year involving a Jackson Hewitt franchise in which the government has alleged that prepared federal income tax returns improperly claimed that casino distributions to Native Americans are not taxable. The government recently obtained an injunction barring a Miami Jackson Hewitt franchise from filing such returns. Information on that case is available at http://www.usdoj.gov/tax/txdv06429.htm.
In addition, the government recently filed suit to secure an injunction against a southern California certified public accountant who the government alleges prepared false returns purporting to eliminate the federal tax on casino distributions paid to the members of a Native American tribe. More information about this case is available at http://www.usdoj.gov/tax/txdv06497.htm.
Since 2001, the Justice Department has obtained injunctions against more than 200 return preparers and tax-fraud promoters. Information about these cases is available at http://www.usdoj.gov/tax/taxpress2006.htm. Information on the Justice Department’s Tax Division is available at http://www.usdoj.gov/tax/index.html.