The Justice Department announced late last week that it has asked a federal court in Montgomery, Alabama to bar Larry Baxter, his tax-return-preparation company, and a former employee from preparing federal income tax returns.

According to the government’s complaint, Baxter, his company Baxter and Associates Office of Accountancy, P.C., and former employee Anita Dawkins claim inflated earned income tax credits on customers’ tax returns. The complaint alleges that Baxter has return-preparation offices in Jacksonville, Florida and Dothan, Alabama.

Congress originally approved the earned income tax credit in 1975. When the earned income tax credit exceeds the amount of taxes owed, the government refunds the excess to those who claim and qualify for the credit. The complaint alleges that Baxter and Dawkins prepared returns containing either made-up or inflated business profits, to fraudulently increase refund amounts based on the earned income tax credit. The defendants allegedly prepared one customer’s return with a false claim that she owned a day care business that had $5,000 in gross receipts, leading to an improper refund of over a thousand dollars. The complaint contends that the defendants have prepared 1,700 federal income tax returns since tax year 2000.

“Return preparers who prepare false or fraudulent returns are risking serious trouble, including potential criminal prosecution,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Department of Justice and the Internal Revenue Service are working vigorously to stop abuses of the tax system.”

The complaint also seeks an order requiring the defendants to provide the Justice Department the names, Social Security or employer identification numbers, addresses, e-mail addresses, and telephone numbers of their customers.

Source, Department of Justice