Department of Justice Seal Department of Justice
FOR IMMEDIATE RELEASE
WEDNESDAY, APRIL 12, 2006
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888

JUSTICE DEPARTMENT ASKS FEDERAL COURT TO BAR JACKSON HEWITT FRANCHISE FROM PREPARING IMPROPER TAX RETURNS FOR NATIVE AMERICANS

Civil Injunction Suit Alleges That Florida Franchise Prepared Returns Falsely Asserting Tax Exemptions for Tribe Membersí Casino-Operations Income


WASHINGTON, D.C. - The Justice Department today asked a federal court in Miami to bar a Jackson Hewitt franchise Labib Baltagi Inc., based in Miami, its owner, and three others from preparing federal income tax returns that falsely claim federal-income-tax exemption for casino gaming proceeds paid to Native Americans. The individuals named in the lawsuit are Ahmad Labib Baltagi (the franchise owner, of Miami) and three others alleged to have worked at the firm when the returns were prepared: his wife Lucille Baltagi, their son Mark Baltagi (both of Miami), and Velona Lawrence (of Opa Locka, Fla.).

According to the government complaint, Labib Baltagi, Inc. operates under a franchise agreement with Jackson Hewitt Tax Services, Inc., which is headquartered in Parsipanny, N.J. The suit does not allege wrongdoing by the New Jersey-based franchiser.

The government complaint alleges that returns the defendants prepared for Seminole Tribe members falsely claimed that the Tribe’s distributions of casino gaming proceeds to tribe members were exempt from federal tax. Native Americans, like all Americans, must pay federal income taxes on all income they earn or receive unless there is express language in a statute or treaty exempting the income from taxation. Moreover, the federal Indian Gaming Regulatory Act, which regulates tribes’ operation of casinos, allows tribes to distribute gaming proceeds to tribe members only if the tribes treat the income as taxable and advise tribe members that the income is taxable.

“The law is clear that income from the casino gaming activities of Native American tribes is taxable,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “Honest preparers and the public should know that the IRS and Justice Department are working vigorously to stop the filing of false returns during this year's tax filing season.”

The Justice Department has sought and obtained injunctions against more than 170 return preparers and tax-fraud promoters since 2001. Information about this initiative is available at http://www.usdoj.gov/tax/taxpress2006.htm. Information on the Justice Department’s Tax Division is available at http://www.usdoj.gov/tax/index.html.

Related Documents:

  United States v.
  Labib Baltagi Inc., et al.

Complaint

(PDF document)


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