WASHINGTON – The United States has filed a lawsuit asking a federal district court in McAllen, Texas, to permanently bar Hector Rangel Jr. from preparing federal tax returns for others, the Justice Department announced today.
According to the complaint, Rangel, who resides near and does business in McAllen, has been preparing federal tax returns for customers since 2003 that contain false, improper, or inflated itemized deductions or business-expense deductions. The complaint also alleges that Rangel prepares returns that claim improper tax credits such as the earned income tax credit (EITC), fails to create or retain accurate "due diligence" documentation for EITC claims, and does not sign and provide his identification number on all returns he prepares. Most of Rangel's customers allegedly reside in southern Texas.
In one instance described in the complaint, Rangel allegedly claimed farming-expense deductions on three tax returns for a married couple who did not own a farming business and never provided any farm-expense documentation to Rangel. The lawsuit also alleges that Rangel claimed improper tax credits on his own income tax returns for 2008 through 2010 and that the Internal Revenue Service (IRS) assessed accuracy-related penalties against him with respect to those returns.
The complaint further alleges that 96 percent of the returns examined by the IRS, which Rangel had prepared from the 2003 through 2012 tax-filing seasons, were found to have understated the tax liabilities of Rangel's customers. According to the complaint, the IRS estimates that the total tax harm from Rangel's unlawful tax-preparation activities during that period could be over $15 million.
Return preparer fraud is one of the Internal Revenue Service's Dirty Dozen Tax Scams for 2013 which can be viewed at www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013. The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional. In the past decade, the Justice Department's Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website at www.justice.gov/tax/taxpress2013.htm.
Department of Justice
FOR IMMEDIATE RELEASE
Thursday, October 31, 2013
Justice Department Seeks To Shut Down South Texas Tax Preparer
McAllen Area Man Allegedly Prepares Tax Returns Claiming False Deductions And Credits
Updated April 6, 2015