Federal Court Shuts Down Nationwide Tax Preparation Business

A federal court in Chicago has ordered Servicios Latinos Inc. to close its nationwide tax preparation business, the Justice Department announced today.  The order comes after the Justice Department filed a civil lawsuit against the business and its owners, Georgina Lopez, Pamela Miranda and Jorge A. Miranda, alleging that the defendants falsely understated their customers’ tax liabilities or overstated their customers’ entitlement to a tax refund.  The injunction also prohibits Lopez, Pamela Miranda and Jorge Miranda from acting as federal tax preparers, owning or operating tax preparation businesses and employing tax preparers.  The defendants agreed to entry of the injunction, but did not admit the allegations in the complaint.

According to the complaint, Servicios Latinos operated out of approximately 84 stores in as many as 30 states, with locations including Kennet Square, Pennsylvania; Kansas City, Missouri; and Las Vegas, Nevada.  The complaint alleged that the defendants’ employees prepared income tax returns that:

• Falsely claim child tax credits;
• Falsely claim the Earned Income Tax Credit;
• Claim incorrect filing statuses; and
• Report incorrect income and expense figures.

The complaint alleges that Servicios Latinos has prepared more than 42,000 federal income tax returns since 2012.  The Internal Revenue Service (IRS) has estimated that the loss to the U.S. Treasury from the defendants’ conduct exceeds $4.7 million for 2014 alone, according to the complaint.

Return preparer fraud has been named one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016.  The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.