The United States has asked a federal court to bar a tax preparation firm and its owner, John Newlin, from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint in the civil injunction suit, Newlin’s business, Quick Sam Tax Refund of Gary, Ind., has repeatedly prepared federal income tax returns that unlawfully understate customers’ income tax liabilities by fabricating expenses, creating false losses, and claiming bogus dependents.
According to the complaint, Quick Sam guarantees its customers that they will receive the largest refund by getting their taxes prepared at Quick Sam. In order to deliver on this promise, the complaint alleges that Quick Sam employees fabricate business expenses, claim improper tax credits and report fictitious dependents to increase customers’ tax refunds illegally. Newlin and Quick Sam allegedly give bonuses to employees for engaging in these fraudulent practices.
According to the complaint, over 96 percent of the Quick Sam returns examined by the Internal Revenue Service (IRS) contained deficiencies requiring IRS adjustments. The complaint alleges that the total harm to the government caused by the illegal conduct could exceed $35 million.
The complaint also states that Charles Standifer, Rhonda Murphy, Chanel Bandy and Brittaney Walker-Lipsey, all former Quick Sam return preparers, have recently pleaded guilty to tax-related crimes.
Claiming bogus tax refunds is one of the IRS’s “Dirty Dozen” tax scams for 2012 . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website .