Federal Court Puts Yet Another Crooked Tax Preparer Out of Business
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Federal Court Puts Yet Another Crooked Tax Preparer Out of Business

The USDOJ says that Theus fraudulently inflated her customers' tax refunds and deposited the money into her own bank account

May 11, 2016

A federal court has barred a Tennessee tax return preparer from preparing tax returns for others, the U.S. Department of Justice (USDOJ) announced this week.

The court's injunction forbids Michelle Cole Theus, also known as Michelle Cole, and Cole Tax Services from preparing federal tax returns or operating a return-preparation business. It also requires Theus to turn over a complete list of her customers to the government. The USDOJ says that Theus agreed to the injunction without admitting or denying the factual allegations in the United States' civil complaint against her.

According to the United States' complaint, Theus initially prepared accurate tax returns for her customers, but then fraudulently increased the returns' claimed refund—for example, by adding fictitious dependents or false education credits. Theus then had the fraudulently inflated portion of the refund, or sometimes the entire refund, deposited into her own bank account, the complaint alleges.

The Internal Revenue Service (IRS) estimates that Theus has fraudulently claimed at least $788,220 in false tax refunds.

Return preparer fraud is one of the IRS's Dirty Dozen Tax Scams for 2016. The agency offers some helpful tips on its 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 dishonest tax preparers. Information about these cases is available on the Department's website.

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 .