Federal Court Shuts Down Houston Area Tax Return Preparers
A federal court in Houston, Texas, permanently enjoined Levett Navarro Camarena and her son Chase Edward Camarena from preparing federal tax returns for others, including under the name of the business Hispanic Services, the Justice Department announced today. Levett Camarena and Chase Camarena agreed to civil injunction orders that require them to cease preparing federal tax returns.
According to the government’s complaint, Levett Camarena and Chase Camarena, through a business called Hispanic Services located on Nyland Street in Houston, Texas, routinely prepared federal tax returns for customers that contained false, improper, or inflated individual deductions on Schedule A (Itemized Deductions) and business expenses on Schedule C (Profit and Loss from Business Sole Proprietorship). Furthermore, the returns reported Schedule C businesses that did not exist, according to the complaint.
The complaint alleged that in some cases the returns overstated business income. The allegations in the complaint explained that while overstating business income increased self-employment taxes, the increase was substantially less than increased earned income credits also claimed on the returns. The increased earned income credits would cause an understatement of the client’s tax liability, according to the complaint.
According to the complaint, the Internal Revenue Service (IRS) examined 409 returns for years 2012 through 2014 filed by Hispanic Services and prepared by Levett Camarena or Chase Camarena. The IRS adjusted 278 of the returns (68%) examined with average deficiencies between $1,848 to $2,352, according to the complaint. The IRS selected 20 tax returns prepared and filed by Hispanic Services for 2015 and was able to talk to 17 taxpayers, according to the complaint. Each taxpayer interviewed stated the charitable contributions or business expenses on the returns did not exist or were grossly exaggerated, according to the complaint. Each taxpayer allegedly denied giving the amount used on the return to the preparer. According to the complaint, the IRS selected and interviewed 17 taxpayers whose 2016 returns were prepared by Hispanic Services. According to the complaint, at least 9 of the 16 clients whose returns were prepared by Levett Camarena said the returns understated their respective tax liabilities by reporting false business information. In addition, one client whose return was prepared by Chase Camarena stated his charitable contributions were grossly overstated on his Schedule A, according to the complaint.
Return preparer fraud is one of the IRS's Dirty Dozen Tax Scams for 2017. 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.