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Beaumont Tax Preparer Accused of $1.3M in Tax Evasion
A shocking case of tax evasion has been uncovered in Beaumont, Texas, where a local tax return preparer is accused of bilking the US government out of over $1.3 million in unpaid taxes. Michelle Denise Johnston, owner of Allen and Johnston Tax Service, allegedly prepared and filed false tax returns for her clients, understating their federal income tax liabilities by fabricating businesses and expenses, inflating existing business expenses, and manipulating itemized deductions.
According to the complaint filed in the U.S. District Court for the Eastern District of Texas, Johnston engaged in a brazen ‘refund-skimming’ scheme, where she would collect a second tax preparation fee from her customers by inflating and/or fabricating deductions, credits, and losses on their tax returns. This scheme, which occurred unbeknownst to her clients, resulted in Johnston taking a second cut of the tax refund, leaving her customers with a smaller refund than they were initially told they would receive.
The complaint alleges that Johnston prepared over 3,100 tax returns for tax years 2018 through 2020, resulting in significant losses of tax revenue for the United States. The US government is seeking to bar Johnston from owning or operating a tax return preparation business and preparing federal income tax returns for others.
Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement, stating that return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams. Taxpayers seeking a return preparer should remain vigilant, the IRS warns.
The IRS has information on its website for choosing a tax preparer, including a free directory of federal tax preparers and tips on how to avoid ‘ghost’ tax preparers, who refuse to sign a return. If you believe one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
This is not the first time the Tax Division has taken action against unscrupulous tax preparers. 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.
Key Facts
- State: Texas
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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