The United States has sued Steven M. Doletzky, Michael A. Garno, Michael A. Bass, and Florida corporations they used to operate Liberty Tax Service stores in the St. Petersburg, Florida area.  The complaint seeks to permanently bar Doletzky, Garno, and Bass from preparing federal tax returns for others.  In addition, the complaint seeks orders from the federal court requiring all defendants to disgorge to the United States any ill-gotten fees Doletzky, Bass, and Garno charged customers for the preparation of false or fraudulent federal tax returns, the Justice Department announced today.

According to the complaint, as part of his tax fraud scheme, Doletzky recruited homeless individuals as customers by offering food, beverages, and false promises of assistance with obtaining welfare benefits on their behalf.  Doletzky allegedly obtained vans to transport homeless individuals to his Liberty Tax Service stores from locations in the St. Petersburg area where homeless people were known to congregate.  Doletzky then directed others to prepare false tax returns on behalf of these homeless individuals that claimed fraudulent tax refunds, the bulk of which Doletzky retained as tax preparation fees, the complaint alleges.

According to the lawsuit, Doletzky directed the preparation of false or fraudulent tax returns at his Liberty Tax Service stores and provided tax preparation training to Garno and Bass before they became independent Liberty Tax Service franchisees.  The complaint alleges that Doletzky, Garno, and Bass directed their preparers to prepare federal income tax returns that claimed fraudulent claims for tax credits, including for education credits and the Earned Income Tax Credit (EITC).  For example, from 2013 to 2015, Doletzky, Garno, and Bass’ Liberty Tax Service stores allegedly prepared and filed federal income tax returns that claimed over 1,250 separate, false claims for education credits.

The IRS has a list of steps on their website that you can take now in anticipation of filing your 2017 federal income tax return and ten tips for choosing a tax preparer. Return preparer fraud was one of the IRS’s Dirty Dozen Tax Scams for 2018 and taxpayers seeking a return preparer should remain vigilant. The IRS has some information on their website about selecting a return preparer and has launched a free directory of federal tax preparers.