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September 30, 10

NEWS / Federal Court Bars Multi- Million Dollar Tax Fraud Scheme Operating in Southern California


WASHINGTON - A federal court in Los Angeles has permanently barred three Huntington Beach men from preparing federal tax returns for customers, the Justice Department announced today. The civil injunction order, entered by U.S. District Judge A. Howard Matz, states that Alexander H. Adams, who does business as Adams Beach Income Tax, and his sons, Brandon A. Adams and Garrett R. Adams, prepare federal income tax returns claiming massive fraudulent tax refunds based on fabricated income tax withholdings.

The court order also bars the Adamses from promoting tax fraud schemes, including the 1099-OID program or "commercial redemption" program. The court held that the Adamses "promote a tax fraud scheme designed to siphon massive fraudulent tax refunds from the U.S. Treasury." The court found that under their scheme, the Adamses prepare various false IRS forms, such as Form 1099-OID, to request fraudulent refunds based on phony claims of large income tax withholding. The court order states that the scheme is based in part on defendants’ absurd claim that secret accounts exist that can be accessed to pay these refund claims.

According to the court order, the Adamses prepared tax returns claiming huge false tax refunds, often exceeding $500,000. Two of the returns, including one for Garrett Adams, included fraudulent claims of $2.5 million. Other courts have enjoined return preparers for promoting the same type scheme.

The court order also requires the Adamses to provide a list of their customers to the United States and to notify their customers of the injunction.

Return preparer fraud and bogus refund claims based on false 1099-OID forms are identified by the IRS two of the 2010 "Dirty Dozen" tax scams. In the past decade the Justice Department’s Tax Division has obtained hundreds of injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s website.

http://www.justice.gov/opa/pr/2010/September/10-tax-1093.html

Tags: form 1099, irs form,
 




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