Justice Department Seeks to Shut Down California Tax Return Preparers
Tax Return Preparers Allegedly Claimed False Deductions and Credits on Tax Returns
The Justice Department announced today that it has asked a federal court in California to permanently bar Vida Farley and AJV Bookkeeping Inc. from preparing tax returns for others.
According to the complaint, the government alleges that, for the past several years, the defendants engaged in a pattern of claiming false education credits and false or grossly inflated Schedule A deductions for charitable contributions, unreimbursed employee business expenses and other expenses on behalf of their customers.
According to the suit, which was filed in the U.S. District Court for the Eastern District of California, Farley has been a tax return preparer for more than 20 years and since 2008, has operated a tax return preparation business through AJV Bookkeeping Inc. The defendants’ practices of claiming false deductions and education credits have resulted in significant lost tax revenues as they understate tax liabilities and claim improper refunds, according to the suit.
Specifically, the suit alleges that the Internal Revenue Service (IRS) examined more than 200 returns the defendants prepared between 2010 and 2014, and that more than 96 percent of these returns have resulted in adjustments to tax, with the proposed deficiencies averaging roughly $4,000 per return. The complaint alleges that the defendants prepared more than 17,000 returns between 2010 and 2014.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014. 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.