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Federal Court Orders Shutdown of Tax Prep Chain

By:
Chris Gaetano
Published Date:
Feb 19, 2016
GavelA federal court in Chicago has ordered the closing of a nationwide tax prep chain due to a pattern of understating tax liabilities and overstating refund entitlements, according to Accounting Today. The Department of Justice complaint accuses the company, Servicios Latinos Inc., which has 84 locations in 30 states, of costing the U.S. government at least $4.7 million due to falsely claimed child tax credits; falsely claimed Earned Income Tax Credits; incorrect filing status claims, and incorrect income and expense claims. 

"The defendants have continually and repeatedly engaged in conduct... that understated their customers' tax liabilities based on positions for which there was no realistic possibility being sustained on the merits, submitting tax returns without a reasonable basis, and knowingly or recklessly misreporting deductions and other entries on their customers' federal tax returns," said the injunction.

Under the injunction, the defendants have been barred from preparing, filing or assisting in the preparation of any federal tax return, and from having an ownership stake in any company that does the same. The defendants have also been ordered to send the government a list of all their customers and tax preparers, and to send copies of the injunction to both groups. 

The defendants waived their right to appeal without admitting or denying the allegations in the complaint.