KENNEWICK, Wash.-The Justice Department has filed a complaint against a Kennewick tax preparer for allegedly filing false claims.
The complaint, filed in District Court for the Eastern District of Washington, seeks to bar former IRS Revenue Agent Donald Taylor, who left the IRS in 2008 to work as a paid tax return preparer in Kennewick, from owning or operating a tax return prep business and preparing tax returns for others.
The DOJ’s complaint alleges that Taylor filed tax returns for customers that contained errors, fabrications and false entries.
Taylor’s tax scheme reportedly took advantage of the differences between running a business as a sole proprietorship and an S corporation.
According to the Justice Department, sole proprietors reports any income and expenses on Schedule C on their individual tax returns, while S corporations are not subject to federal income tax at the corporate level.
Taylor allegedly prepared false income tax returns by fabricating businesses and business expenses and by taking deductions for employee paid expenses and employer reimbursements without an accountable plan or reimbursement policy.
Taylor understated the tax liabilities of his customers causing an estimated $42 million in lost tax revenue between 2017 and 2020.
According to the DOJ, Taylor was penalized twice before by the IRS between 2007 and 2010 for understating customers’ liabilities.