Michigan Tax Preparers Permanently Barred from Preparing Returns for Others

WASHINGTON –The Justice Department today announced that Chief District Judge Paul L. Maloney has permanently barred Joyce M. Stone and Charles J. Freed, both of Tipton, Mich., from preparing income tax returns for others. Judge Maloney, sitting in Kalamazoo, entered the order and judgment, which also bars Stone, Freed and their company, Stone and Associates, from aiding or assisting others in the preparation of income tax returns and from engaging in any other conduct that substantially interferes with the enforcement of the internal revenue laws. Stone and Freed consented to the entry of the permanent injunctions against them.

According to the government’s filings, Stone and Freed prepared customers’ income tax returns claiming improper deductions, including improper deductions for fictitious or inflated charitable contributions and employee expenses. The court previously found that, acting individually or through their business, Stone, Freed and a third defendant prepared more than 3,500 income tax returns since January 2005. An IRS audit of a sample of returns they prepared showed that these returns understated tax liability by an average of $6,283 per return.

Stone and Freed have been barred from preparing income tax returns for others since the entry of a preliminary injunction against them in 2006. In a separate criminal proceeding, Judge Maloney on Nov. 30, 2009, sentenced Stone and Freed to prison for 37 months, to be followed by two years of supervised release. Both pleaded guilty in June 2009 to conspiring to defraud the IRS with respect to their return-preparation activities. At the sentencing hearing, the court found that Stone and Freed had repeatedly violated the preliminary consent injunction by continuing to prepare returns ever after they had been ordered by a federal judge to stop.

In the past decade the Justice Department has obtained injunctions against more than 435 tax-scheme promoters and tax preparers. Information about those cases is available on the Justice Department Web site.