WASHINGTON—The Justice Department announced today that a federal court has permanently barred Jack R. Gosney of Riverside, Calif. and Hal J. Clark of Baja California, Mexico from promoting a tax scheme that involved creating phony tax deductions and acting as federal income tax return preparers. The permanent injunction, to which Gosney and Clark consented, was entered by Judge J. Spencer Letts of the U.S. District Court for the Central District of California. The government is also seeking a permanent injunction against a third defendant, Charles T. Kizer of Riverside, Calif. The case against Kizer is pending.
The government complaint in the suit alleges that the defendants, operating under the names JRG Financial Group or JRG Associates in Riverside, Calif., prepared returns for customers claiming improper deductions for personal expenses and grossly inflated business expense deductions. The complaint asserts that the defendants created fictitious partnerships and sole proprietorships in order to improperly reduce customers’ reported tax liabilities. The government suit alleges that the three men prepared over 8,000 returns in the past five years for either individuals or partnerships. According to the complaint, an Internal Revenue Service audit of 120 returns signed by Gosney, Clark, or Kizner revealed that the three preparers understated their customers’ tax liabilities by an average of $16,000 per return.
The permanent injunction entered against Gosney and Clark requires that they notify their customers of the injunction and give the Justice Department the names, addresses, e-mail addresses, telephone numbers and Social Security numbers of their recent customers.
The case is part of an ongoing crackdown on fraudulent return preparers. The Justice Department has sought and obtained injunctions against more than 180 return preparers and tax-fraud promoters since 2001. More information about these cases is available at http://www.usdoj.gov/tax/taxpress2006.htm. Information about the Tax Division is available at http://www.usdoj.gov/tax/index.html.