SANTA ANA, California – A federal judge has ordered a Buena Park man to stop preparing or helping to prepare tax returns after federal authorities determined his clients filed tax returns that claimed bogus dependents and fraudulently sought more than $50 million in tax refunds.
The judgment that became public today enjoins Jose Pineda and his business – the Anaheim-based ABK Income Tax & Travel, Inc. – from directly or indirectly acting as federal tax return preparers and other federal tax-related activities.
According to a civil complaint filed in March 2021 by the United States, between 2013 and 2020, Pineda and ABK fraudulently claimed fabricated or unqualified dependents on their customers’ tax returns, thus claiming refundable credits to which they were not entitled, including the child tax credit, the additional child tax credit and the earned income credit.
When the IRS confronted taxpayers with the false returns, they confirmed the dependents were added fictitiously and they did not qualify for the tax benefit. A majority of Pineda and ABK’s customers came from Spanish-speaking immigrant communities in Orange County. Due to their limited education, language ability and knowledge of tax or accounting matters, most of Pineda and ABK’s customers followed Pineda’s direction to certify that their tax returns were correct, even though they did not understand contents of the returns.
Pineda and ABK’s customers revealed during interviews with IRS authorities that, even when Pineda and ABK knew the IRS was disallowing erroneously claimed dependents, Pineda and ABK continued to falsely report these same dependents on their customers’ tax returns for subsequent years. According to the government’s complaint, between 2016 and 2020, Pineda and ABK prepared approximately 22,340 federal income tax returns, and 89% of those returns sought refunds – a total of approximately $51,899,961 in refunds, most of which stemmed from fraudulent deductions on those returns.
This case was handled by Assistant United States Attorney Najah Shariff of the Tax Division. The IRS’ Abusive Transactions Investigation Group conducted the investigation in this matter.
The judgment entered today on the court’s docket concludes the government’s case in United States v. Jose Pineda, individually and doing business as ABK Income Tax & Travel, and ABK Income Tax & Travel, Inc., SACV21-463. United States District Judge David O. Carter on Tuesday filed the judgment for injunction with the consent of Pineda and ABK.
Return preparer fraud remains a high priority of the IRS, and taxpayers seeking a return preparer should remain vigilant. The IRS has published tips on its website for choosing a tax preparer and has launched a free directory of federal tax preparers.