Philly tax firm barred from claiming the First-Time-Homebuyer credit for customers

A federal court has barred a Philadelphia tax preparation firm and its owner from preparing federal tax returns claiming first-time-homebuyer tax credits and tax deductions for certain expenses, the Justice Department announced.   The court’s preliminary injunction order against Friday James of Landsdowne, PA, who does business as Frika Tax Services, will remain in effect while the government’s lawsuit seeking a permanent injunction proceeds in court.
 
Following a court hearing at which the government presented evidence against James, including testimony from several of his customers, the court found that James “negligently or willfully understated tax liability on many of the federal income tax returns he prepared for his clients.”   The court found that James claimed the first-time-homebuyer credit for customers who did not qualify for the credit and claimed deductions for business and miscellaneous expenses that were “erroneous, unrealistic or unreasonable.”
 
The court also stated that, absent an injunction, many of James’s customers would be likely to “underpay their tax liabilities and bear financial harm by having to pay overdue taxes, interest, and possible penalties.”   The court required James to provide a copy of the injunction order to all persons for whom he has prepared any federal income tax returns.
 
Return preparer fraud is one of the Internal Revenue Service’s “Dirty Dozen” tax scams  for 2011.   In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers.   

You may like these other stories...

Starting in October, the IRS will send warning letters to tax return preparers who appear not to be complying with Earned Income Tax Credit (EITC) due diligence requirements.Section 6695(g) of the Internal Revenue Code...
BKD LLP adds Illinois accounting firm Wolf & Co.Springfield, Missouri-based CPA and advisory firm BKD LLP and Chicago-based accounting firm Wolf & Co. have agreed to merge, the firms announced on Monday. Wolf will...
A new government report on Monday found that the IRS may not be completing the required research steps in collecting delinquent taxes before considering the cases “not collectible.”The Treasury Inspector General...

Already a member? log in here.

Upcoming CPE Webinars

Oct 9In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards.
Oct 15This webinar presents the requirements of AU-C 600, Audits of Group Financial Statements (Including the Work of Component Auditors).
Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.
Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.