U.S. COURT IS ASKED TO BAR DALLAS FIRM FROM PREPARING TAX RETURNS FOR OTHERS

Tax Preparer Allegedly Uses Bogus Fuel Credits in Tax Scam

WASHINGTON – The United States has sued a Dallas-area income tax preparer, seeking to bar him and his business from preparing federal income tax returns for others, the Justice Department announced today. According to the government’s complaint, Farai Chihota, who operates Quick Return Tax Service, prepared federal income tax returns claiming fraudulent fuel tax credits. The complaint says the fuel credit scam is a serious enforcement problem for the Internal Revenue Service (IRS).

The complaint alleges that Chihota fraudulently prepared a return for one customer—a janitor—claiming that he bought 53,454 gallons of gasoline for business-related purposes. The lawsuit explains that, for such a claim to be accurate, the janitor would have had to spend more than five times his total income on gasoline.

The government complaint alleges that the IRS has identified over $1.2 million dollars in fraudulent fuel tax credits on Chihota-prepared returns. The complaint also alleges that Chihota has prepared many fraudulent Schedule C forms claiming bogus deductions to reduce customers’ reported tax liabilities. The complaint asks the court to order Chihota to turn over his customer list to the Justice Department.

Since 2001, the Justice Department’s Tax Division has obtained injunctions against more than 305 tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website, as is information about the Justice Department’s Tax Division.