Justice Department Asks Federal Court to Shut Down Fraudulent Tax Return Business Operated by Retired Chicago Fire Department Captain
The United States has filed a complaint seeking to bar a retired Chicago firefighter from preparing federal tax returns for others, the Justice Department announced today.
The civil complaint against Irving Brown Sr., which was filed in the U.S. District Court for the Northern District of Illinois, alleges that Brown has prepared federal income tax returns for firefighters and other Chicago-area taxpayers which understate the customers’ correct tax liabilities in order to minimize the taxes they owe and maximize tax refunds. The suit alleges that Brown operates Irving Brown Sr. Tax Services out of his Chicago home.
The government alleges that Brown obtains inflated tax refunds for his customers through the use of fraudulent earned income tax credits, false charitable deductions and fake business expenses on a Schedule C (Profit or Loss From Business). The suit alleges that the customers own no business or, if they do, the business-related expenses are false. The Internal Revenue Service (IRS) interviewed several of Brown’s customers, who stated that the improper deductions, credits and Schedule C business expenses and income were false and not based on information they provided to Brown, according to the suit.
According to the complaint, Brown also frequently prepares returns claiming head of household filing status for customers who are ineligible for that status. For other customers, the complaint alleges that Brown created false Schedule E (Supplemental Income and Loss) expenses from fictitious rental real estate to create tax deductions. Among other things, a Schedule E is used to report income or loss from rental real estate property. The complaint alleges that, in some instances, Brown prepared false invoices and receipts in order to substantiate the false expenses for customers who were being examined by the IRS.
The lawsuit states that the IRS estimates Brown has prepared more than 2,000 tax returns since 2011. The IRS has completed examinations of 94 of those returns, and the total tax deficiency for those returns alone exceeds $740,000, according to the complaint. Based on the number of returns the defendant prepared, the complaint alleges that Brown’s actions could have cost the U.S. Treasury more than $1 million.
Return preparer fraud is one of the IRS’ 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 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.