A federal court in Kansas City, Kansas, has permanently barred Everett Bias and Integrity Solutions Tax Consultants Inc. (ISTC) from preparing federal tax returns for others, the Justice Department announced.
In its complaint, the government alleged that Bias, of Olathe, Kansas, and ISTC prepared false returns for customers located in both Kansas City, Kansas, and Kansas City, Missouri.
In addition to barring the defendants from preparing tax returns, the court ordered the defendants to contact all customers for whom they prepared federal tax returns since 2014 to inform them of the permanent injunction and provide the United States with a list of all of these persons.
According to the government’s complaint, Bias and ISTC unlawfully prepared federal tax returns that lowered their customers’ federal tax liabilities by using S corporations. This type of corporation passes corporate income, losses, deductions, and credits to its shareholders for federal tax purposes. Shareholders report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. According to the government’s complaint, Bias and ITSC:
•Failed to report S corporation pass-through income as taxable income on the customers’ personal income tax returns;
•Falsely lowered the income of customers’ S corporations and then reported that false lowered income amount on the customers’ personal income tax returns;
•Improperly double-deducted customers’ personal expenses, such as mortgage interest and real estate taxes, on customers’ corporate and personal returns; and
•Concocted S corporations in order to improperly deduct customers’ personal expenses as business expenses and lower pass through income or create a phony flow through loss.
The government similarly alleged that Bias and ISTC concocted businesses for customers claiming that they were sole proprietors — which are required to report its profit or loss on a Schedule C (Form 1040, Schedule C, “Profit or Loss from Business”) to the income tax return — then fabricated the income and expenses of the fictitious business to show a loss, which falsely lowered their customers’ taxable income. Finally, the government alleged that Bias and ISTC fabricated itemized deductions such as unreimbursed employee business expenses and medical/dental expenses on their customers’ personal tax returns.
The IRS has tips on its website for choosing a tax preparer (https://www.irs.gov/uac/newsroom/irs-urges-taxpayers-to-choose-a-tax-preparer-wisely-for-the-filing-season-ahead) and has launched a free directory of federal tax preparers (https://irs.treasury.gov/rpo/rpo.jsf).
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers, a spokesman said. Information about these cases is available on the Justice Department’s website (https://www.justice.gov/tax/tax-division-press-releases). An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on the web page (https://www.justice.gov/tax/program-shut-down-schemes-and-scams).
