Justice Department Files Civil Action to Shut Down Mississippi Tax Return Preparer

The United States has filed a complaint in the U.S. District Court for the Northern District of Mississippi seeking to bar a Senatobia, Mississippi, tax return preparer from preparing federal income tax returns for others.

The civil complaint was filed against Kathy R. Moton and alleges that she owns and operates defendant K&M Tax Essentials LLC. According to the complaint, Moton and K&M Tax Essentials prepared and filed hundreds of tax returns from 2018 through 2020. The complaint alleges that defendants prepared returns that claimed false American Opportunity Tax Credits, which provide a tax credit for tuition and expenses for an undergraduate or other recognized education credential. The complaint further alleges that defendants submitted forms to the IRS falsely attesting that they confirmed the taxpayer’s eligibility for the credits, but concealed the fraudulent claims from their customers by omitting forms from the copies of returns provided to those customers. According to the complaint, defendants’ practices resulted in a loss to the IRS of over $1 million.

Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. (More information can also be found here.) The IRS has information on its website for choosing a tax preparer, has launched a free directory of federal tax preparers, and offers information on how to avoid “ghost” tax preparers, whose refusal to sign a return should be a red flag to taxpayers. The IRS also has a list of important reminders for taxpayers who are about to file their 2020 tax returns, including how to prepare for a smooth filing process.

In addition, IRS Free File, a public-private partnership, offers free online tax preparation and filing options on IRS partner websites for individuals whose adjusted gross income is under $72,000. For individuals whose income is over that threshold, IRS Free File offers electronic federal tax forms that can be filled out and filed online for free.

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’s 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.