UNITED STATES SEEKS TO SHUT DOWN CALIFORNIA FRAUDULENT TAX RETURN PREPARATION BUSINESS

The following press release was published by the US Department of Justice on Dec. 16, 2004. It is reproduced in full below.

FOR IMMEDIATE RELEASE THURSDAY, DECEMBER 16, 2004 WWW.USDOJ.GOV TAX (202) 514-2007 TDD (202) 514-1888 WASHINGTON, D.C. - The Tax Division of the Justice Department, working together with the United States Attorney’s Office in Los Angeles, today asked a federal court to bar a Rialto-based company and four Southern California individuals from preparing federal income tax returns. The lawsuit, filed today in Los Angeles, alleges that NCK Services, Inc., Carla D. Berry, Karen D. Berry, and Valerie M. Dixon all of Rialto and Ivan T. Johnson, of San Bernardino, have repeatedly prepared for their customers tax returns claiming improper deductions, including false and inflated deductions for mortgage interest and business expenses.

According to the complaint, the individual defendants prepare returns for NCK, whose typical customers heard about the return preparation company through word-of-mouth from friends or relatives who used the company. The complaint alleges that since tax year 1999, NCK has prepared returns for more than 10,000 individuals, at fees ranging from $80 to $150 per return. NCK-prepared returns for tax year 2003 analyzed by the IRS showed an average tax loss to the government of $2,230 per return. The complaint says that the IRS estimates the defendant’s activities cost the federal treasury $20 million.

“The Justice Department is working vigorously to stop unscrupulous return preparers, whose activities unfairly shift the tax burden to honest American taxpayers,” said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. “We are committed to using all available tools, including injunctions and, where appropriate, criminal prosecution, to stop systematic abuses of the tax system.” The complaint also seeks an order requiring defendants to provide the Justice Department the names, Social Security numbers, addresses, e-mail addresses, and telephone numbers of their customers.

The government’s complaint is part of an ongoing crackdown on return preparers who are giving false advice. The government has filed numerous lawsuits seeking injunctions against return preparers who improperly prepare federal tax returns. More information about these cases is available at: http://www.usdoj.gov/tax/taxpress2004.htm. More information about the Tax Division is available at: http://www.usdoj.gov/tax/index.html. 04-791

Source: US Department of Justice