On Jan. 25, the United States filed a civil injunction suit seeking to bar Arnold Zio, individually and doing business as Platinum Citizens Financial LLC and FTP Tax Services, from owning or operating a tax return preparation business and preparing tax returns for others.
The complaint, filed in the U.S. District Court for the Southern District of Florida, alleges that Zio started preparing fraudulent returns with the Maryland firm Money Back Tax before moving his operation to Florida. Zio has prepared returns without identifying himself on the returns, failed to receive proper authorization from his clients before filing their returns, and has failed to give his clients copies of their documents, the complaint alleges.
The government alleges that Zio prepared tax returns claiming over $600,000 in falsified or inflated business expenses, over $500,000 in fabricated business losses and over $850,000 in false tax deductions and credits, including falsified charitable contributions, unreimbursed employee expenses and gambling losses. According to the complaint, Zio has also diverted at least $188,000 from clients by depositing client refunds and Economic Impact Payments, also known as COVID-19 stimulus payments, into his own bank account.
Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. (More information can also be found here.) The IRS has information on its website for choosing a tax preparer, has launched a free directory of federal tax preparers, and offers information on how to avoid “ghost” tax preparers, whose refusal to sign a return should be a red flag to taxpayers. The IRS also has a checklist of things to remember when filing income tax returns in 2022.
In addition, IRS Free File, a public-private partnership, offers free online tax preparation and filing options on IRS partner websites for individuals whose adjusted gross income is under $72,000. For individuals whose income is over that threshold, IRS Free File offers electronical federal tax forms that can be filled out and filed online for free.
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.