Federal District Court Shut Down California Tax Return Preparers
Return Preparers Allegedly Overstated Refunds Through Fabricated and Inflated Deductions and Credits
A federal court in Fresno, California, has permanently barred Ken Mendoza and Alice Mendoza from preparing federal tax returns for others, the Justice Department announced today. Ken Mendoza and Alice Mendoza, who operated under the business name “Mendoza Business Services” in Fresno, consented to the civil injunction order, which was signed by U.S. District Judge Lawrence J. O’Neill in the U.S. District Court for the Eastern District of California.
According to the complaint, the Mendozas improperly understate their customers’ federal tax liabilities by fabricating expenses, claiming false or inflated credits, particularly educational credits, and deducting personal expenses of their customers. In total, the complaint alleges that the loss to the U.S. Treasury from the Mendozas’ activities could be as much as $2.8 million for tax years 2010 through 2011. The complaint also alleges that many of the Mendozas’ customers may owe additional tax, interest and penalties because of the improperly prepared returns.
In addition to barring the Mendozas from preparing or filing federal tax returns for others, the court also enjoined anyone acting in concert with the Mendozas from preparing or filing federal tax returns, and prohibited the Mendozas from requesting or directing the preparation of federal tax returns for others. The court required the Mendozas to contact all persons for whom they prepared a federal tax return since Jan. 1, 2008, to inform all such persons of the permanent injunction entered against them.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2013 . 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 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.