The Justice Department announced this week that a federal court has ordered Ronald Paul of Seattle, Washington to stop acting as an income tax return preparer.
The court found that Paul, who does business under the name "The Tax Clinic," engaged in conduct that led to the understatement of tax liabilities. The preliminary injunction order bars Paul from preparing any federal income tax returns for compensation and from providing any tax advice or other tax services, including representing customers before the IRS.
"The Justice Department is working energetically with the IRS to halt fraudulent tax return preparation," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "Fraudulent preparers not only cheat the IRS, but also cheat their customers by exposing them to possible civil and criminal penalties."
The United States alleged in court that Paul violated the law by preparing tax returns that claimed fictitious deductions, including fictitious business losses, charitable contributions, and employee business expenses.
In addition it is alleged that Paul frivolously claimed that customers are owed refunds of all income taxes they have paid, under a baseless "claim of right theory."
According to papers filed by the government, the IRS has identified 391 suspicious returns prepared by Paul and contends that Paul is responsible for over $1.3 million in understated tax liabilities.
More information about this case is available at:
http://www.usdoj.gov/tax/txdv04262.htm, and information regarding the bogus nature of the "claim of right" theory is available at: www.irs.gov/irb/2004-12_IRB/ar12.html.