The United States Department of Justice has filed a complaint that seeks to prohibit nine Florida tax return preparers and their associated businesses from helping prepare federal income tax returns for others.
According to the complaintRichard Louis, sometimes known as the “tax collector,” Teddy Davis, James Merrill, Daniel Ouku, Demetrius Knowles, Harold Bornelus, Joseph Garrett, Marlyne Wah, and Romeo Davis prepared and filed thousands of federal income tax returns for customers through or in connection with an unincorporated business called Taxman.
Specifically, court documents establish that Louis is a paid tax preparer who operates a tax preparation business, Tax Man Financial or Tax Man, Inc., in Fort Lauderdale, Florida. It is alleged that his co-defendants worked with him to prepare tax returns. Louis and his co-defendants typically charge between $90 and $250 per statement, depending on the complexity.
Prosecutors claim Louis and his co-defendants understated the tax owed by their clients and overstated the refunds they were entitled to through various schemes.
One scheme used by the defendants was to claim fraudulent Home Energy Credits on their customers’ tax returns. According to the lawsuit, Louis and his co-defendants offset qualified solar equipment purchases and, in most cases, did not discuss the Resident Energy Credit with customers. While the average rate for Florida taxpayers who claimed the credit was 2.13%, Louis and his co-defendants reported much higher rates, ranging from 28.74% to a whopping 78.26%.
Louis and Taxman also allegedly falsified and exaggerated business and itemized deductions on their clients’ tax returns, including filing Schedules C (business programs) for clients they know do not own or operate a business. Some clients were unaware that Louis and his co-defendants were filing statements showing business losses.
Statements were also prepared for clients that did not correctly reflect Schedule A deductions, including charitable deductions. In one case, the complaint alleges that a client reported donations of $200-300 to the church, but Louis reported $8,903 in charitable deductions. In another example, a client said that he had $1,500 in medical expenses, but Louis reported $12,982. The same kinds of misreporting were made with regard to property taxes and mortgages: on one occasion, Louis is said to have included the mortgage interest twice.
It is also alleged that Louis and his co-defendants prepared tax returns for clients claiming incorrect filing status using the head of household filing status or the single filing status for married couples who should have filed as married.
The IRS estimates that the United States has lost millions of dollars in tax revenue due to the actions of the defendants. The lawsuit states that if the defendants continue to act as tax return preparers, “their conduct will result in irreparable harm to the United States.”
A permanent injunction, the feds argue, is the appropriate solution. They have also requested, among other things, a list of customer names, Social Security numbers and contact information.
Many taxpayers who sought help from the defendants have already had to amend their tax returns.
Remember: it’s your signature on the line. The Department of Justice reminds you to be careful when choosing a tax preparer. You can find a searchable directory of preparers in your area who currently have IRS-recognized professional credentials or an Annual Tax Season Program Completion Record at IRS website.
You can find an alphabetical list of those who have been banned from preparing returns and promoting tax schemes this page. If you believe that one of these individuals or businesses may be violating a court order, please contact the Justice Department’s Tax Division with details.