Lawsuit against tax preparation companies in the Detroit area
The tax franchisor is affected by four civil actions.
The United States has filed four civil suits in federal court in the US District Court for the Eastern District of Michigan. The lawsuits are aimed at preventing a Detroit tax preparation franchisor from “owning, operating, and franchising tax preparation businesses” and “creating the franchisor and certain others who have agreements to operate under their company’s name Prohibiting tax returns on behalf of others According to the complaint, which also called on the court to oblige the defendants to pay the preparation fees received by preparing allegedly fraudulent returns.
The complaint against Jeanisia Allen alleges that she owns, operates and franchises a tax return preparation business known as “The Tax Experts” through co-defendants First Choice Tax Solutions LLC, The Tax Experts Inc., The Tax Experts LLC and Top Notch Taxes Inc. The other three complaints allege that Jennifer Sherman, Erica McGowan, Annetta Powell and Jasmine Powell each had agreements with Jeanisia Allen and her company The Tax Experts LLC to use the name The Tax Experts. “
In addition, “Defendants and their companies are preparing and filing tax returns to falsely increase their customers’ refunds and take advantage of high and often undisclosed preparation fees at the expense of their customers and the US Treasury.” The complaint states: ” The defendants have committed wrongdoing including falsely claiming the earned income tax credit. Manufacture of business, business income and expenses resulting in undervalued tax liabilities; Right to wrong educational credits; and entitlement to inadmissible registration status. Each of the complaints alleges that the defendants’ activities have harmed their customers, who may now face substantial penalties and interest. “
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The tax experts have operated at least 32 stores, mostly in the Detroit metro, but also in Chicago and Los Angeles. From 2017 to 2019, the tax experts reportedly prepared more than 17,000 federal returns seeking refunds of over $ 82 million. The complaint alleges, “Allen and The Tax Experts have failed to train, monitor and control companies operating under an agreement to use this name, including failing to audit tax returns filed in franchise businesses resulting in the creation of false or fraudulent tax returns; frequent and widespread false receipts, expenses, entitlements, credits, and deductions. “
Acting Assistant Attorney General David A. Hubbert of the Department of Justice’s Tax Department said, “Especially at this time of year when honest taxpayers file their tax returns, we want the public to know that the Department of Justice will be working with our partners at the IRS to prosecute those who that would abuse our nation’s tax laws. Fraudulent tax filers too often attempt to take advantage of their customers and the Treasury Department, which undermines our tax system. “
The relief programs put in place as a result of the pandemic have also resulted in some taking advantage of the system and filing fake returns to take advantage of federal funding. Earlier this month, 35-year-old Miami-based Leonel Rivero, also a tax advisor, was charged with cable fraud related to a program to provide over a hundred coronavirus aid loans under the Paycheck Protection Program (PPP). Rivero filed approximately 118 fraudulent PPP loan applications on behalf of himself and his co-defendants to apply for more than $ 2.3 million in PPP loans.
The Justice Department is suing the Detroit area tax preparation franchisor, four others using the franchise name to stop suspected tax fraud
Tax advisors charged with COVID-19 loan fraud