Justice Department Seeks to Shut Down Fraudulent Colorado-Area Tax Return Business

The United States has asked a federal court to permanently bar a Colorado man and the tax preparation business he operates from preparing federal tax returns for others, the Justice Department announced today.   

According to the government’s civil complaint, Gerardo Herrera and his business, El Lobo Multiservicios Professionales Inc., fraudulently reduced their customers’ tax liabilities by reporting extra dependents and claiming bogus deductions.  For example, the complaint alleges that Herrera and his staff have repeatedly claimed their customers’ extended family members as dependents, even though they do not qualify for dependent status under federal law, and have improperly claimed deductions for personal expenses like cell phones and car insurance.  In addition, according to the complaint, audits have shown that Herrera and his workers exaggerated deductions, reported fraudulent charitable contribution deductions and claimed improper head of household filing status.  The complaint alleges that the Internal Revenue Service (IRS) audited more than 200 returns prepared by Herrera’s business and found misrepresentations on more than 99 percent of them.

Return-preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015.  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of fraudulent tax preparers. Information about these cases is available on the Justice Department website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.