The United States has sued Marge L. Cellini and Harry Portnoy of Las Vegas seeking to bar them from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, Cellini and Portnoy, who are married and do business as Tax Factory Inc. and/or Myst Inc., repeatedly prepare tax returns that include false or inflated deductions for personal or business expenses in order to reduce their customers’ federal income tax liabilities fraudulently.
Among the allegations cited in the complaint, Cellini and Portnoy advise their customers to form corporations and then claim false or grossly exaggerated deductions for purported business expenses on the corporate tax returns they prepare. The government alleges that the bogus deductions create phony business losses or reductions in corporate income that carry over to the customers’ personal income tax returns, thereby fraudulently reducing the customers’ taxable income.
According to the complaint, an Internal Revenue Service (IRS) investigation revealed that Cellini and Portnoy claimed refunds for their customers on nearly 90 percent of the returns they prepared. The suit alleges that Cellini and Portnoy attempted to hide their improper return-preparation activity by repeatedly failing to identify themselves as the preparers of tax returns – sometimes fraudulently using Cellini’s ex-husband’s social security number as their preparer identification number. Despite this, the IRS was able to identify nearly 1,000 federal tax returns allegedly prepared by Cellini and Portnoy since 2001. The complaint alleges that the defendants’ misconduct may have cost the U.S. Treasury tens of millions of dollars.
The IRS lists return preparer fraud as one of its “Dirty Dozen” tax scams for 2012. In the past ten years, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Justice Department website .