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Wednesday, May 20, 2015

Federal Court Shuts Down California Tax Preparer and Convicted Felon

A federal court in Sacramento, California, has permanently barred a former Ripon, California, man from preparing tax returns for others, the Justice Department announced today.

The civil injunction order, to which Sarad Chand consented, was entered by U.S. District Judge Garland E. Burrell Jr. of the Eastern District of California.  According to stipulation, the defendant admitted to repeatedly preparing federal tax returns that understated his customers’ federal tax liabilities.

The complaint alleged that Chand, and others working with him under the business name S. Chand Tax & Accounting Services, prepared tax returns that falsely claimed inflated or fabricated tax credits or deductions.  The suit noted that Chand most frequently prepared returns that falsely inflated unreimbursed employee business expenses.  Chand also created Schedule Cs (Profit or Loss From Business) with false income, while for other clients he created false losses or inflated expenses, according to the suit.  According to the complaint, these fabrications served to improperly reduce the customers’ taxable income and resulted in reduced tax liability or inappropriate tax refunds.  Moreover, according to the complaint, Chand also led his customers to believe that he was a former Internal Revenue Service (IRS) employee, when he was not.

The suit also noted that on May 15, 2014, Chand pleaded guilty to aiding and assisting in the preparation and presentation of a false and fraudulent tax return.  As part of his plea agreement, Chand agreed to the entry of a permanent civil injunction. 

The suit alleged that the IRS had completed examinations of 919 of the approximately 8,155 tax returns Chand prepared from 2008 to 2012, and that nearly all of  the examined returns resulted in a finding of deficiency or denial of a refund claim.  The 886 returns found to be inaccurate had a total tax understatement of more than $2.7 million.

The injunction requires Chand to provide a list of customers for whom he has prepared federal tax returns or claims for refund since Jan. 1, 2012.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015.  The IRS has some tips on its 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 and tax scheme promoters.  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 here.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Press Release Number: 
Updated May 20, 2015