Federal Court Enjoins Iowa Tax Preparation Firm

WASHINGTON - A federal judge in Sioux City, Iowa, has barred a Humboldt, Iowa, woman, Gayle Lemmon, and her tax preparation business from preparing federal tax returns, the Justice Department announced today. U.S. District Judge Mark W. Bennett entered the preliminary injunction against Gayle Lemmon and Gayle’s Bookkeeping and Tax Service Inc. The order, which Lemmon agreed to, remains in effect until further order of the court.

According to the government complaint in the case, Lemmon’s firm, Gayle’s Bookkeeping and Tax Service Inc., prepares federal income tax returns for customers that unlawfully understate tax liabilities by claiming improper deductions for the business use of the home and for non-deductible personal expenses.

The suit alleges that Lemmon claims improper deductions on customers’ returns for charitable contributions and employee business expenses. According to the complaint, the IRS has examined approximately 243 returns that Lemmon prepared and found that 224 of them understated the customer’s tax liability. The complaint alleges that the tax loss from Lemmon’s alleged misconduct between 2003 and 2008 could be as much as $17 million.

In the past decade the Justice Department has obtained injunctions against more than 400 tax preparers and tax fraud promoters. Information about these cases is available on the Justice Department’s Tax Division Web site at http://www.usdoj.gov/tax/.