Justice Department Asks Federal Court to Shut Down Southern Florida Tax Return Preparer and Require Her to Give Her Fees to the United States

Lena Cotton of Wellington, Florida, and her business, Professional Accounting Ldc LLC, located at 3676 Collin Drive in West Palm Beach, Florida, prepare false federal income tax returns for their customers, according to a new civil suit filed by the Department of Justice. The complaint, filed in federal court in West Palm Beach asks a federal judge to bar Cotton and her business, from preparing tax returns for others and order the defendants to disgorge the gross receipts they obtained from the preparation of federal tax returns that made improper claims.

The complaint alleges that the defendants prepare tax returns for customers that understate liabilities and overstate refunds by falsifying information, fabricating deductions, and claiming bogus credits. The complaint alleges that one of their signature schemes is manufacturing education credits for expenses that customers never incurred. For instance, the complaint alleges that the Internal Revenue Service (IRS) has uncovered at least 31 instances of the defendants claiming, for purposes of education credits, that customers attended Palm Beach State College, previously known as Palm Beach Community College, even though the school has no record of their attendance during the relevant time periods.

The complaint further alleges that the defendants frequently selected incorrect filing statuses for their customers, claimed other false tax credits, and misrepresented the extent to which customers used their personal vehicles for work purposes. According to the complaint, a review of 1,034 returns prepared by the defendants for tax years 2012 through 2014 uncovered misstatements on 671 returns (64.9 percent) that cost the United States over $900,000 in tax revenue.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2017, and taxpayers seeking a return preparer should remain vigilant. The IRS has some tips on its website for choosing a return 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’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.