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Wednesday, September 10, 2008
(202) 514-2007
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Justice Department Seeks to Close Down Houston Tax Preparer

Tax Preparer’s Business Allegedly Claimed More Than $700,000 in Bogus Fuel Tax Credits

WASHINGTON – The United States has sued a Houston tax preparer, seeking to put him out of business, the Justice Department announced today. The civil injunction suit, filed in U.S. District Court for the Southern District of Texas, seeks to permanently bar Kyle C. Kasten and his business, KJ & J Tax Services, from preparing federal returns for others.

According to the government complaint, Kasten prepares federal income tax returns with fabricated claims for the federal fuel tax credit. The credit is available only in limited circumstances for off-highway business use. Kasten allegedly claimed that one customer used 44,005 gallons of gasoline in 2007 when the customer’s return showed he earned only $802 that year. The complaint states that, assuming a cost of $2 per gallon, the customer would have had to spend $88,010 to purchase that amount of gasoline. In another example identified in the complaint, Kasten allegedly claimed that a customer used 55,083 gallons of gasoline in 2007. Again, assuming $2 per gallon, that customer would have had to spend $110,166, despite the customer’s return showing that she earned only $21,809.

The government’s complaint alleges that Kasten’s false claims for federal fuel tax credits appeared on more than 80 returns in 2007 and exceeded $700,000. Fraudulently claiming the fuel tax credit is one of the Internal Revenue Service’s "Dirty Dozen" tax scams for 2008.

"Tax preparers who commit fraud can be permanently put out of business," said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division. "The IRS and Justice Department are diligently working to stop return-preparer fraud. Since 2001 the Justice Department has obtained injunctions against more than 350 tax preparers and tax-fraud promoters."

Information on these cases is available on the Justice Department Web site. Information about the Justice Department’s Tax Division is also available.