02/08/2012

News / U.S. Court Bars Two in Alabama from Preparing Federal Tax Returns

Montgomery Pair Allegedly Asserted Bogus Refund Claims on Customers’ Returns

A federal court has permanently barred Paul E. Foster Jr. and Sheree McDade, both of Montgomery, Ala., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Foster and McDade agreed without admitting the government’s allegations, was signed by Chief Judge W. Keith Watkins of the U.S. District Court for the Middle District of Alabama.



The government complaint alleged that Foster and McDade, through businesses called Miami Tax, Paul’s Tax Service and Advance Taxes Inc., prepared tax returns for customers that reported phony business expenses for fictitious businesses, inflated earned income and falsely claimed dependents in order to increase refunds based on the earned income tax credit. The complaint also alleged that at least 48 returns that Foster and McDade prepared for the 2008 tax year contained false claims for the first-time homebuyer tax credit. According to the complaint, Foster and McDade’s misconduct has thus far resulted in $1 million of lost tax revenue, plus resources spent by the Internal Revenue Service (IRS) to assess and collect unpaid taxes from the customers.



The court ordered Foster and McDade to send a copy of the injunction order to all customers for whom they prepared a federal tax return for tax years 2006 and later. The court also ordered the pair to provide the government with a list of those customers.



In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website .

http://www.justice.gov/opa/pr/2012/February/12-tax-177.html

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