Federal Court Bars Mississippi Tax Return Preparer from Preparing Returns for Others

The U.S. District Court for the Southern District of Mississippi permanently barred Teresa Chism of Durant, Mississippi, from preparing federal tax returns for others, the Justice Department announced today.

According to the government’s civil complaint, Chism, who operated her business as Lady T. Taxes, prepared federal income tax returns that fraudulently overstated her customers’ claims for refunds.  She did so by claiming refundable credits, including the Earned Income Tax Credit (EITC) and credits for education expenses, that her customers either were ineligible to receive, or were not entitled to receive in the amounts claimed on the returns, the complaint alleged.  The complaint further alleged that Chism frequently fabricated Forms W-2 and submitted them with a tax return as evidence of a customer’s eligibility for the EITC.

The United States alleged in the complaint that Chism prepared at least 2,845 returns since 2010.  Audits of 220 returns prepared by Chism claiming the EITC and/or other refundable credits revealed that 98 percent of these returns claimed credits totaling more than $1 million that Chism’s customers were not eligible to receive, according to the complaint.

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 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.