Two federal judges in separate cases entered orders permanently barring Marvin Binion Sr., his son Marvin Binion II, Binion Sr.’s ex-wife Tonya Hubbard and her firm Universal Tax Service LLC from preparing tax returns for others, the Justice Department announced today. The civil injunction orders, to which all defendants consented, were signed by Judge Roger W. Titus and Judge Alexander Williams Jr., of the U.S. District Court for the District of Maryland.
The two government complaints, one against the Binions and one against Hubbard and her firm, alleged that the defendants prepared fraudulent tax returns for customers containing bogus deductions for items like charitable contributions, unreimbursed employee business expenses and other miscellaneous expenses. The lawsuits also alleged that Hubbard, Universal Tax Service LLC and the Binions violated federal law by not signing the returns they prepared for customers and by not placing IRS preparer identification numbers on the returns. All tax preparers are required to place an IRS-issued tax preparer identification number on every federal income tax return they prepare for a customer.
According to the complaints the defendants prepared customer returns using commercial tax software, placed the returns in postage-paid pre-addressed envelopes and instructed customers to sign and mail the returns to the IRS on their own. The suits alleged that defendants did this to hide from the IRS their role in preparing the returns.
The government alleged that Hubbard and the Binions charged customers a return-preparation fee of $300 and that the Binions may have earned as much as $30,000 per day preparing fraudulent returns.
The Internal Revenue Service has listed tax-preparer fraud as one of the “Dirty Dozen” tax scams. The Justice Department has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters in the past 10 years. Information about these cases is available on the Justice Department’s website www.justice.gov/tax.