FOR IMMEDIATE RELEASE|
THURSDAY, SEPTEMBER 25, 2008
TDD (202) 514-1888
FEDERAL COURT ORDERS DALLAS MAN AND BUSINESS TO STOP PREPARING TAX RETURNS FOR OTHERS
Tax Scam Allegedly Involved More Than $1.2 Million in Bogus Fuel Credits
WASHINGTON - A federal court in Dallas has barred Farai Chihota from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint in the case, Chihotas Quick Return Tax Service operated in the Dallas area and prepared returns claiming fraudulent fuel tax credits. Chihota agreed to the civil injunction order.
The complaint alleged that the Internal Revenue Service has identified more than $1.2 million dollars in fraudulent fuel tax credits on Chihota-prepared returns. The complaint also alleged that Chihota has claimed many bogus deductions to reduce customers reported tax liabilities.
Chihota allegedly prepared a fraudulent return for one customer—a janitor—claiming a fuel credit based on the customers purported purchase of 53,454 gallons of gasoline for business-related purposes. The complaint said that for the claim to be accurate the janitor would have had to spend more than five times his total annual income on gasoline and would have had to drive more than 2,900 miles per day assuming 20 miles per gallon of gas.
For another customer – a driver – Chihota allegedly prepared a fraudulent return claiming a fuel credit based on the customers purported purchase of 54,000 gallons of gasoline in 2005. As stated in the complaint, for this claim to be accurate, the customer would have had to spend approximately $108,000 for gasoline even though the customer did not report any income for the year. Assuming mileage of 20 miles per gallon, the driver would have had to drive 810,000 business miles during the year or 2,220 miles each day of the year, seven days a week.
Tax preparers who submit fraudulent claims can and will be put out of business, said Nathan J. Hochman, Assistant Attorney General for the Justice Departments Tax Division. Since 2001, the Justice Departments Tax Division has obtained injunctions against more than 350 tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site, as is information about the Justice Departments Tax Division.