WASHINGTON - The Justice Department announced today that it has sued a federal income tax preparer in U.S. District Court in Miami seeking to bar her from preparing tax returns for others. According to the governmentâ€™s civil injunction complaint, Tashanna McFarland of Miramar, Fla., prepared federal tax returns claiming fraudulent fuel tax credits, a scam that the complaint explains is a serious enforcement problem for the Internal Revenue Service (IRS). The suit alleges that McFarland operates her tax preparation business out of a booth at a flea market in Miami.
Federal law imposes a fuel tax on gasoline and diesel fuel sold in the United States. The tax is included in the purchase price at the pump. Businesses can claim a fuel tax credit in certain rare circumstances, but most businesses and consumers who use cars or trucks on roads and highways are not eligible for the credit. According to the governmentâ€™s complaint, McFarland claimed the fuel credit on her customersâ€™ returns so they could claim tax refunds to which they were not entitled.
The complaint says that on a return for one customerâ€”a babysitterâ€”McFarland claimed that the customer purchased 16,451 gallons of gasoline for business-related purposes. The suit notes that for such a claim to be accurate, the babysitter (whose total income for the year was $9,316) would have had to spend approximately $36,192 for gasoline that yearâ€”nearly four times her total incomeâ€”and would had to have driven approximately 246,765 miles during the year, an average of 676 miles each day, seven days a week.
The government complaint alleges that McFarland has prepared at least 970 returns since 2003 and the IRS has identified over $1.5 million dollars in fraudulent fuel tax credits on McFarland-prepared returns. â€œPeople who have their returns prepared by others should review them carefully to make sure they are truthful,â€ said Eileen J. Oâ€™Connor, Assistant Attorney General for the Justice Departmentâ€™s Tax Division. â€œThe preparer who seems to be saving you taxes now is setting you up for trouble later, when the IRS realizes that you filed a false return and obtained a larger refund, or paid less in taxes, than you should have.â€
â€œThis problem is primarily being caused by unscrupulous tax return preparers located across the country," said Kathy Petronchak, Commissioner of the IRS Small Business / Self Employed Division. "The IRS is working closely with the Department of Justice to stop this behavior."
Since 2001, the Justice Departmentâ€™s Tax Division has obtained more than 215 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns.