Federal Court Bars Another Tax Return Preparer from Preparing Returns for Others

Teresa Chism, who operated as Lady T. Taxes, prepared federal income tax returns that fraudulently overstated her customers' claims for refunds

Federal Court Bars Another Tax Return Preparer from Preparing Returns for Others
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April 22, 2016

The U.S. District Court for the Southern District of Mississippi has permanently barred Teresa Chism, of Durant, Mississippi, from preparing federal tax returns for others, the U.S. Department of Justice (USDOJ) announced.

According to the government's civil complaint, Chism, who operated her business as Lady T. Taxes, prepared federal income tax returns that fraudulently overstated her customers' claims for refunds. She did so by claiming refundable credits, including the Earned Income Tax Credit (EITC) and credits for education expenses, that her customers either were ineligible to receive, or were not entitled to receive in the amounts claimed on the returns, according to the complaint.

The complaint further alleges that Chism frequently fabricated Forms W-2 and submitted them with a tax return as evidence of a customer's eligibility for the EITC.

The complaint states that Chism prepared at least 2,845 tax returns since 2010. Audits of 220 returns prepared by Chism claiming the EITC and/or other refundable credits revealed that 98 percent of these returns claimed credits totaling more than $1 million that Chism's customers were not eligible to receive, according to the complaint.

Tax return preparer fraud is one of the IRS's Dirty Dozen Tax Scams for 2016. The IRS has some tips on their website for choosing a tax preparer and has also launched a free directory of federal tax preparers.

In the past decade, the USDOJ's Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.

An alphabetical listing of all persons that have been barred from preparing tax returns and promoting tax schemes can be found here. If you believe that one of these individuals or businesses may be violating an injunction order, contact the Tax Division .