FOR IMMEDIATE RELEASETAX TUESDAY, MAY 15, 2001 (202) 514-2007
WWW.USDOJ.GOVTDD (202) 514-1888
DOJ FILES FOR INJUNCTION TO HALT TAX PREPARER FROM
FILING RETURNS CLAIMING BOGUS TAX REFUNDS Government Alleges That Tax Preparer Duped More Than 100 Taxpayers With Frivolous Interpretation of Tax Code
WASHINGTON, D.C. The Department of Justice today filed court papers seeking an injunction against Alfred Abdo, Jr, doing business as American Tax Planning Co., based in Winston-Salem, North Carolina. The case, entitled Alfred Abdo, Jr. d/b/a American Tax Planning Co. v. United States, No. 01-CV-0098, is in the United States District Court for the Middle District of North Carolina.
"Alfred Abdo's conduct has victimized both the United States and the many taxpayers who were persuaded to file these refund claims," said Claire Fallon, Acting Assistant Attorney General of the Justice Department's Tax Division. "The IRS and Justice Department will move swiftly to ask courts to stop this sort of scheme. This case shows that taxpayers must be vigilant when selecting tax advisors, especially those who make promises that appear too good to be true."
According to the Government's court filings, Abdo has been using a website, radio appearances, and written promotional materials to market his services of providing a "second opinion" on previously-filed federal and state income-tax returns. In exchange for an initial fee plus 50% of all refunds obtained, Abdo offers to prepare and file amended tax returns on behalf of taxpayers who have had social security taxes withheld from their wages. He also guarantees $200 to any client for whom he cannot obtain a refund.
Upon receiving the initial fee, Abdo has prepared and filed amended tax returns that reduced income by the amount of withheld social-security taxes, thereby claiming an income-tax refund. Because social-security taxes are not excludable from gross income, the Government's court filing states that the IRS has rejected all these claims that it could identify, but some taxpayers received erroneous refunds before the IRS identified the pattern of Abdo's bogus refund claims.
The Government further alleges in the lawsuit that Abdo's $200 guarantee, which federal law prohibits, has persuaded many taxpayers that Abdo's services are legitimate. More than one-hundred taxpayers have paid him to file amended tax returns that include this frivolous exemption from income. The Government's filing further said that Abdo has enlisted others to market his plan and services and share in the fees charged.
The Justice Department has asked the court to order a stop to Abdo's marketing of his frivolous plan and his tax-return-preparation work.