U.S. COURT ISSUES PERMANENT INJUNCTION ORDER AGAINST MAINE TAX RETURN PREPARER

Woman Allegedly Inflated Deductions, Capital Losses and Tax Credits on Customers’ Returns Causing a Potential Loss to the U.S. Treasury Exceeding $100,000

WASHINGTON – A federal court in Maine permanently barred Donna L. Hamilton from preparing federal tax returns for others, the Justice Department announced today. The court also ordered the Maine resident to provide her customer lists to the government and to mail copies of the court order to her customers. Hamilton consented to the civil injunction order.

According to the government complaint, Hamilton operated a tax return preparation service under the name East Coast Accounting from her mother’s residence in Topsham, Maine. Hamilton allegedly purchased the business from her mother, Carol East Palesky, who had previously operated a business that provided tax return preparation and other accounting services under the name East Accounting Associates. On Dec. 12, 2007, U.S. District Judge D. Brock Hornby issued an order of permanent injunction against Palesky prohibiting her from preparing federal tax returns and advising anyone about the preparation of a federal income tax return.

The complaint states that Hamilton prepared approximately 82 returns during the 2006 and 2007 filing seasons. The government complaint also alleges that Hamilton prepared federal tax returns during the 2005 filing season but did not sign any of the returns. The complaint further alleges that the IRS estimates a potential $123,000 loss to the U.S. Treasury.

According to the complaint, Hamilton fabricated and/or inflated deductions relating to employees’ business expenses, capital losses and education credits. One example in the complaint asserts that Hamilton reported a $1,000 education credit on her customers’ tax return even though the customers had never provided her with any information that would suggest that they were enrolled in college or had incurred any educational expenses during the tax.

Acting Assistant Attorney General John A. DiCicco thanked Tax Division trial attorney Lisa Bellamy for her handling of the government’s case. The Justice Department has obtained injunctions against more than 375 tax return preparers and tax-fraud promoters over the past decade. Information about the Justice Department’s Tax Division and its efforts to stop fraudulent return preparers is available on the Justice Department Web site.