Unenrolled Tax Preparer Outfit Shut Down for Tax Fraud

Unenrolled Tax Preparer Outfit Shut Down for Tax Fraud

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Orlando television station WFTV reports of yet another unenrolled tax preparer outfit that bites the dust: 

An Orlando tax preparer may have single-handedly cheated the federal government out of at least $1 million. Investigators shut down the Lancaster Tax Service on Wednesday. 

The tax service is accused of making up dependents and deductions, for things like cell phone expenses, for clients. Customers must now pay up, plus interest and penalties. 

Federal court documents show the Lancaster Tax Service prepared almost 4,000 tax returns for clients in 2006 and 2007. The IRS says owner Elisa Barron repeatedly prepared returns with overstated deductions or tax credits. It says her actions resulted in the underpayment of $1 million in taxes during those two years, but she’s been in business for more than eight years.

WFTV went to her east Orange County house Wednesday to talk to her about it; she wasn’t home, but she was reached by phone. 

“I just wonder how you could do this at a time like this, bilk the federal government out of a million dollars in taxes in two years,” WFTV reporter Kathi Belich questioned. 

But Barron wouldn’t answer questions and neither would two of her clients who, although married, filed as singles to get earned income credits and $7,000 in unsubstantiated deductions for cell phone and clothing expenses, which the IRS “disallowed.” Court documents show two other Orange County clients of Lancaster Tax Service, Mira and Slobodan Medakovic claimed a charitable deduction of $2,989 for cash they had sent to relatives in Croatia. 

Barron lost her house to foreclosure last year. She got most of her clients through word of mouth. Tax preparers don’t have to have any special training, but if you use one you’re responsible for the claims on your tax return.

Score a point for tax preparer regulation.

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About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida