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Coatesville, Pa. Woman, with Help from Husband, Allegedly Fabricated Deductions for Customers. Estimated Loss to U.S. Treasury Could Exceed $7 Million

WASHINGTON - A federal judge in Pennsylvania has permanently barred Chalamar Muhammad and her husband, Curtis Muhammad, from preparing tax returns for others, the Justice Department announced today. Judge Harvey Bartle III of the U.S. District Court for the Eastern District of Pennsylvania entered the order of permanent injunction after the Coatesville, Pa., couple failed to defend against the governmentís allegations. The case against the third defendant, Chalamarís mother, Doranna Muhammad, remains pending.

According to the government complaint in the case, the three family members operated CDC Tax Preparation and Financial Services. The firm allegedly prepared federal income tax returns for customers claiming fabricated deductions and credits. Examples of bogus tax deductions mentioned in the governmentís court papers include false claims of contributions of thousands of dollars to churches and charities, and false claims of education credits. According to the complaint, the Internal Revenue Service (IRS) has identified more than $2.2 million in unreported tax liability on returns prepared by the defendants that it has audited, and estimates that the total cost to the U.S. Treasury from the defendantsí misconduct may exceed $7 million.

The government complaint alleges that the firm prepared more than 2,600 tax returns for customers since 2003. Chalamar Muhammad allegedly tried to obstruct IRS audits of her customersí returns by submitting documents that she fabricated to purportedly substantiate bogus deductions and credits. The complaint alleges that the Muhammads changed the businessís name and its IRS electronic filing number frequently in order to stay a step ahead of the law. As part of the courtís order, Chalamar and Curtis Muhammad are permanently barred from using the IRSís E-File program to file tax returns for others.

Acting Assistant Attorney General John A. DiCicco thanked Tax Division trial attorney Ellen Weis for her handling of the governmentís case, and Revenue Agent Julie Hersh of the Internal Revenue Serviceís Small Business Self-Employed Division for her extensive investigative work. Over the past decade, the Justice Departmentís Tax Division has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters.

Information about the Justice Departmentís Tax Division and its efforts to stop tax-fraud promoters and fraudulent tax preparers is available on the Justice Departmentís Web site.

Related Documents:

  United States v. Chalamar Muhammad, et al.
Permanent Injunction

(PDF document)

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