WASHINGTON - A federal court in Savannah, Ga., today permanently barred Ophelia Kelley, of Vidalia, Ga., from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Kelley operated two return preparation firms in Vidalia – Kelley Tax Service and City and Country Girl Tax Service. Kelley agreed to the civil injunction order.
The civil injunction suit alleged that Kelley and her businesses repeatedly and intentionally engaged in fraudulent conduct by claiming improper deductions and tax credits for customers. Kelley allegedly claimed bogus fuel tax credits for customers who were not entitled to the credit. The fuel credit is available only to taxpayers who operate farm equipment or off-highway business vehicles. It is not available for vehicles driven on roads or highways.
The complaint alleged that Kelley fraudulently claimed absurdly large credits for truck drivers by falsely reporting purchases of huge quantities of fuel, often more than the customer could have bought using all his annual income. Return preparer fraud and fuel credit scams are on this year’s IRS list of the Dirty Dozen Tax Scams. In the past few years the Justice Department has obtained injunctions shutting down many tax preparers who claim the bogus credits on customers’ returns.
According to the complaint, Kelley also fabricated false deductions for such things as medical expenses and charitable gifts. The suit also alleged that Kelley failed to sign at least 100 tax returns she prepared for customers. Paid tax preparers are required by law to sign all returns they prepare.
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson Hoffman, the Justice Department trial attorney who handled the case, and Shauna Henline, a senior technical advisor with the IRS’s Small Business/Self Employed Division, who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained more than 395 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department’s Web site.