The United States has filed a complaint in the U.S. District Court for the Southern District of Florida, Miami Division, seeking to bar two Miami-area tax return preparers from preparing federal income tax returns for others.
The civil complaint was filed against Gerald Vito, James Eleby, and Gerald Vito LLC dba Income Tax Services and alleges that defendants prepared federal income tax returns for numerous Miami-area taxpayers that significantly understated their customers’ tax liabilities. The complaint further alleges that in reporting their customers’ itemized deductions, defendants fabricated or inflated charitable deductions, medical expenses, and employee business expenses. According to the complaint, claiming false or inflated deductions allows a fraudulent tax preparer to underreport the customer’s taxable income and reduce their reported tax liability, which in many cases leads to bogus and fraudulent refund claims. The complaint also alleges that defendants significantly understated their customers’ tax liabilities by reporting false or inflated business losses.
According to the complaint, defendants prepared more than 1,900 tax returns during the 2018 and 2019 calendar years, and each such return, on average, understates the tax the customer owes by thousands of dollars. As a result, the complaint alleges, defendants have likely cost the United States millions of dollars in lost tax revenue. The complaint further alleges that defendants have harmed their customers, who could potentially be required to pay tax deficiencies, interests, and penalties as a result of defendants’ conduct.
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 electronical 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 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.