Court Bars South Carolina Tax Return Preparer from Preparing Returns for Others
Charleston Tax Preparer Filed Returns with Fabricated and Inflated Deductions and Credits to Overstate Tax Refunds
The Justice Department announced today that a federal district judge in Charleston, S.C. permanently barred Stacy Middleton from preparing federal income tax returns for others.
According to the government’s complaint, Middleton and a second defendant, George Jenkins, prepared federal income tax returns in Charleston through a business named MBM Tax and Accounting Services LLC. As alleged, Middleton prepared returns for his clients that unlawfully understated his clients’ income tax liabilities and overstated his clients’ refunds through a variety of schemes. The complaint alleged that Middleton prepared returns that unlawfully created fictitious deductions and credits as well as overstating and duplicating existing deductions and credits. The complaint further alleged that Middleton created fraudulent copies of Form 1099 on behalf of customers, creating fake income to enable Middleton to claim the Earned Income Tax Credit on behalf of his clients. According to the complaint, the Internal Revenue Service (IRS) examined 842 returns prepared by Middleton and Jenkins, and over 93 percent of those examinations resulted in an adjustment to their client’s tax liability. According to the complaint, the IRS estimated that the U.S. Treasury lost as much as $55 million in revenue on account of Middleton’s and Jenkins’ misconduct.
Middleton consented to the entry of the injunction. The government’s claims remain pending against Jenkins and will be addressed in further court proceedings.
In the past 10 years the Justice Department’s Tax Division has obtained injunctions against hundreds of tax return preparers and tax fraud promoters. Information about these cases is available at www.justice.gov/tax/taxpress2013.htm.
United States v. Stacy Middleton, et al.
Permanent Injunction (PDF)