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Friday, January 29, 2016

Federal Court Preliminarily Orders Florida Man to Close Tax Preparation Business and Bars Him From Preparing Federal Tax Returns for Others

Court Orders Nation Tax Services to Shut Down Immediately Based on a “Pattern of False Tax Returns

A federal court in Orlando, Florida has preliminarily barred Jason Stinson from preparing federal tax returns for others and from operating a tax return preparation business, the Justice Department announced today.  The civil order, signed by Judge Anne C. Conway of the U.S. District Court for the Middle District of Florida, requires Stinson to “immediately close all tax return preparation stores that he currently owns.” 

According to the court’s order, Stinson owns a company that operates return preparer storefronts under the name “Nation Tax Services.”  According to the United States’ complaint, Stinson’s stores are in Alabama, Florida, Georgia and North Carolina.

The United States filed its civil injunction complaint against Stinson in September 2014.  The complaint alleged that return preparers in Stinson’s businesses 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 United States Treasury. 

Trial in this case is scheduled for October.  To prevent the alleged fraud from continuing this tax filing season, the United States filed a motion for preliminary injunction to bar Stinson from operating his stores pending resolution of this case after trial.  Following a hearing on the motion, the court today found that the United States “presented enough evidence to show a pattern of false tax returns sufficient to prove it is likely to succeed on the merits” at trial.  The pattern of false returns alleged by the United States includes:

  • Falsely claiming the Earned Income Tax Credit;
  • Fabricating businesses and related business income and expenses;
  • Fabricating Schedule A deductions for unreimbursed employee expenses, charitable deductions and medical and dental expenses; and
  • Claiming false education credits.

The court found that the “falsely reported numbers are not merely oversight, or a computational error, because the errors are repeated and the amounts are significant.”  The court added that it was “most troubled that Stinson’s conduct has continued even after the commencement of this lawsuit in 2014.” 

The court also held that the “Government and Stinson’s customers will suffer irreparable harm if an injunction is not granted.”  The court emphasized “the harm that Stinson’s business causes his customers”:

Stinson’s customers are relying on his business to properly handle their taxes. In return, Stinson’s business exposes these primarily low-income customers to individual tax liability. Both the Government and Stinson’s customers will suffer irreparable harm if an injunction is not granted. Moreover, it is in the public’s best interest to protect vulnerable customers from the inaccurate preparation of their taxes, not to deplete Government resources, and to maintain the public trust in the tax system.

Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams. 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 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.

Topic(s): 
Tax
Component(s): 
Press Release Number: 
16-106
Updated February 8, 2016