Court Shuts Down Illinois Tax Return Preparer
Barred Tax Return Preparer Allegedly Falsely Claimed Unqualified Dependents and Improper Filing Status for Customers
Today a federal court in Illinois permanently enjoined Daria Emma Valdivia, individually and doing business under the name Emma’s Agency, from preparing federal tax returns for others. Valdivia agreed to the civil injunction order entered against her, which requires her to turn over to the United States a list of all persons for whom she prepared federal tax returns since 2012. The court also authorized the United States to monitor Valdivia’s compliance with the terms of the injunction.
According to the government’s complaint, Valdivia, of Sterling, Illinois, routinely prepared federal tax returns, from her business Emma’s agency, for customers that falsely claimed unqualified individuals as dependents, such as persons who did not live in the United States or a country contiguous to the United States. The complaint alleges that Valdivia also improperly reported her customers’ filing status as Head of Household when the customers were ineligible for that status, according to the complaint. The complaint alleges that these two types of return preparer misconduct allowed Valdivia to understate her customers’ tax liabilities and claim undeserved refunds for them. According to the complaint, Valdivia continued to engage in this conduct despite the fact the Internal Revenue Service (IRS) assessed her with $132,000 in penalties for similar violations of the Internal Revenue Code. The complaint alleges that IRS audits of 65 returns prepared by Valdivia show that she underreported her customers’ tax liabilities on 89 percent (58) of them by more than $285,000, collectively.
The IRS is reminding taxpayers that the 2017 individual income tax return filing season begins Jan. 23, 2017, and there is information available on the IRS’s website. Return preparer fraud was one of the IRS’s Dirty Dozen Tax Scams for 2016 and taxpayers seeking a return preparer should remain vigilant. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s 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.