Justice Department Asks Federal Court to Shut Down Iowa Tax Preparation Firm

WASHINGTON - The United States has brought suit in federal court against Gayle Lemmon of Humboldt, Iowa, the Justice Department announced today. The lawsuit seeks to bar her and her firm from preparing federal tax returns for others. 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 government complaint also accuses Lemmon of fabricating deductions on customers’ returns for charitable contributions and inflating deductions for un-reimbursed employee business expenses. According to the complaint, the Internal Revenue Service has examined approximately 243 returns that Lemmon prepared and found that 224 of them understated the customer’s tax liability. The complaint notes 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 380 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department’s Tax Division Web site.