Federal Court Shuts Down Eastern Washington Tax Return Preparer

A federal court entered a permanent injunction yesterday against Grandview, Washington tax return preparer Jose Magana and his business, Genesis Bookkeeping and Accounting.  The injunction bars Magana and Genesis Bookkeeping from preparing tax returns for others.  Magana and Genesis Bookkeeping admitted in a court filing that they had interfered with the enforcement and administration of the federal tax laws.  They agreed to entry of the injunction.

According to the United States’ complaint, Magana and his business have engaged in a pattern of claiming for their clients false or inflated dependency exemptions, inappropriate filing status, and false or inflated Child Tax Credits and Additional Child Tax Credits.  Their practice of claiming these false exemptions and credits has resulted in significant lost tax revenues by understating tax liabilities and claiming improper refunds, according to the suit.

Specifically, the suit alleges that, as of March 26, 2015, the Internal Revenue Service (IRS) had examined close to 300 tax returns that Magana and Genesis Bookkeeping and Accounting had filed from 2012 through 2014.  Over 95 percent of these examinations resulted in adjustments to tax, with proposed deficiencies averaging approximately $3,150 per return, according to the complaint.  The suit alleges that Magana and his business prepared more than 10,000 returns from 2012 through 2014. 

Return preparer fraud is one of the IRS’s 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 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.