Federal Court Permanently Enjoins Iowa Tax Preparation Firm

WASHINGTON - A federal judge in Sioux City, Iowa, today barred a Humboldt, Iowa, woman, Gayle Lemmon, and her tax preparation business from claiming improper deductions on federal income tax returns. The court’s order, which Lemmon agreed to, also prohibits her from representing customers before the IRS and requires her to attend government-approved tax training classes.

According to the government compaint in the civil injunction case, Lemmon’s firm, Gayle’s Bookkeeping and Tax Service, Inc., prepared federal income tax returns for customers that unlawfully understated tax liabilities by claiming improper deductions for the business use of the home and for non-deductible personal expenses. The suit also alleged that Lemmon claims improper deductions for charitable contributions and employee business expenses.

According to the complaint, the IRS examined approximately 243 returns that Lemmon prepared and found that 224 of them understated the customers’ tax liabilities. The complaint alleges that the tax loss from Lemmon’s alleged misconduct between 2003 and 2008 could be as much as $17 million.

In the past decade the Justice Department has obtained injunctions against more than 430 tax preparers and tax fraud promoters. Information about these cases is available on the Justice Department Tax Division’s Web site.