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Birmingham Woman Claimed False Tax Refunds for Customers

WASHINGTON – A federal court has permanently barred Lakeisha Pearson from preparing federal tax returns for others, the Justice Department announced today. The government’s civil injunction complaint alleged that Pearson, of Birmingham, Ala., operated under the trade names “LGS Tax Service,” “PositiveEndeavors LLC,” and “AGA Tax Service.”

In her memorandum of opinion and permanent injunction order, Judge Karon Bowdre of the U.S. District Court for the Northern District of Alabama adopted a U.S. magistrate judge’s report and recommendation finding that Pearson used several fraudulent schemes to increase her customers’ earned income tax credit (EITC) claims and generate large, erroneous tax refunds for her customers. The court found that Pearson repeatedly and continually prepared tax returns with EITC claims that she knew or should have known were false or inflated. The court further concluded that the erroneous refunds generated by Pearson’s false returns may have cost the United States as much as $8.3 million, in addition to the resources dedicated to investigating Pearson. The court also found that Pearson failed to comply with legal requirements for determining her customers’ eligibility for the EITC and the amount of their EITC claims, even after the Internal Revenue Service assessed over $11,000 in penalties against her for such failures.

The court also ordered Pearson to provide a copy of the injunction order to each person for whom she prepared a federal tax return since Jan. 1, 2008, and to provide the government with a list identifying all of her customers during that period.

The EITC is a refundable federal income tax credit for low-to-moderate-income working individuals and families. When the credit exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit. To qualify for the credit, taxpayers must have earned income from employment, self-employment, or another source and meet certain other requirements.

Over the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department website.

Related Documents:

  United States v. Lakeisha Pearson
Final Judgment and Permanent Injunction

Memorandum of Opinion

Report and Recommendation

(PDF document)

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