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Friday, June 6, 2008
(202) 514-2007
TDD (202) 514-1888

Connecticut Woman Barred from Preparing Federal Tax Returns for Others & from Promoting Tax Fraud Schemes

WASHINGTON - A federal judge in Hartford, Conn., has issued a preliminary injunction order against Sunita Buddhu, the Justice Department announced today. The order precludes Ms. Buddhu from preparing federal income tax returns, amended federal income tax returns and other related documents and forms for others. Additionally, the order prohibits the Wethersfield, Conn., resident from representing customers before the Internal Revenue Service (IRS); advising, assisting, counseling or instructing anyone about the preparation of a federal tax return; and promoting tax fraud schemes. The court had entered a temporary restraining order against Ms. Buddhu last month.

The court found that Ms. Buddhu prepared tax returns for Paradise Consulting Services, a tax preparation business started by her father, Deowraj Buddhu. After her father was incarcerated on unrelated state charges in 2005, Ms. Buddhu took over Paradise Consulting and began operating a tax return preparation business under the name Lotus Consulting. Since 2003, the Buddhus have prepared several thousand individual federal income tax returns, many of which the court found contained deductions on Schedule C that were inflated, had no basis in fact, or were not permissible under the Internal Revenue Code. In addition, many of the returns contained false Schedule E deductions.

After Ms. Buddhu learned that many of her customers’ returns had been examined by the IRS, she began filing amended tax returns on behalf of those customers, eliminating the disallowed Schedule C deductions, but replacing them with corresponding deductions on Schedule A. The court noted that the IRS subsequently determined that these Schedule A deductions were also improper.

In addition, the court found that Ms. Buddhu listed false preparer identification numbers on federal income tax returns that she prepared, and that she made "unfounded" representations to her clients that the IRS does not have authority or jurisdiction to conduct examinations of their tax returns.

"The Justice Department is committed to stopping tax defier conduct and shutting down tax preparation businesses that promote fraudulent tax schemes," said John A. DiCicco, Deputy Assistant Attorney General of the Justice Department’s Tax Division.

More information about the Justice Department’s efforts to stop abusive tax schemes and the Tax Division’s Tax Defier Initiative (TAXDEF Initiative) is available on the Tax Division’s Web site.