Federal Court Bars Florida Man from Preparing Tax Returns for Others and Enters $1 Million Disgoregment Judgment
A federal court in Orlando, Florida, has permanently barred a Florida man from preparing tax returns for others and owning or operating a tax return preparation business, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced today.
The court also entered a $1 million judgment against Demetrius Scott of Orlando on the United States’ claim for disgorgement of the proceeds that he received for the preparation of tax returns. The civil injunction and disgorgement judgment were signed by Judge Anne C. Conway of the U.S. District Court for the Middle District of Florida. Scott agreed to entry of the injunction and disgorgement judgment, but did not agree to any of the facts alleged in the United States’ civil complaint.
In September 2014, the United States filed a civil injunction complaint against Scott alleging that he and his employees prepared fraudulent tax returns for customers. Scott was allegedly a former franchisee of LBS Tax Services and operated a tax preparation company called Neighborhood Tax Pros and Tax Giant with locations in Florida, Georgia, North Carolina and South Carolina. The complaint alleged that return preparers in Scott’s business targeted primarily low-income customers with deceptive and misleading advertisements; prepared and filed fraudulent tax returns to fraudulently increase their customers’ refunds; and profited through unconscionable, exorbitant and often undisclosed fees—all at the expense of their customers and the U.S. Treasury. According to the complaint, Scott and his employees prepared federal tax returns on which they falsely claim the earned-income credit and bogus education credits, report improper filing statuses, claim income and expenses related to non-existent businesses and fabricate job-related expenses, while charging their customers deceptive and unconscionable fees.
Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016. 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 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.