Tax Preparers Permanently Enjoined for Claiming Excess Charitable Deductions

Tax Preparers Permanently Enjoined for Claiming Excess Charitable Deductions

News story posted in U.S. District Court on 3 September 2008| comments
audience: National Publication | last updated: 18 May 2011
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Summary

The U.S. District Court has permanently enjoined several tax return preparers from preparing returns for compensation based on the court's finding the defendants understated the tax due (and overstated the refunds due) on customers' federal income tax returns by claiming false and inflated itemized deductions for charitable contributions and employee business expenses.

Citation: United States v. Samuel J. DeAngelo et al.; No. 8:03-cv-00251

Full Text:

Aug. 26, 2008

UNITED STATES OF AMERICA,
Plaintiff,
v.
SAMUEL J. DeANGELO; JOE GORDON SHIELDS, A/K/A GORDON SHIELDS;
ALAN M. HOVEY; JEFFREY R. WRIGHT; KELLY DAVID, A/K/A
DAVID KELLY; AND WESTERN TAX SERVICE, INC.,
Defendants.


UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA

Thomas P. O'Brien
United States Attorney

Sandra R. Brown
Assistant United States Attorney
Chief, Tax Division

Robert F. Conte (SBN 157582)
Assistant United States Attorney
Room 7211 Federal Building
300 North Los Angeles Street
Los Angeles, California 90012
Telephone: (213) 894-6607
Facsimile: (213) 894-0115

W. Carl Hankla
Trial Attorney, Tax Division
U.S. Department of Justice
P.O. Box 683, Ben Franklin Station
Washington, D.C. 20044
Telephone: (202) 307-6448
Facsimile: (202) 307-0054
w.carl.hankla@usdoj.gov

Attorneys for United States of America

PERMANENT INJUNCTION BY CONSENT AGAINST JEFFREY R. WRIGHT

IT IS HEREBY STIPULATED AND AGREED by the United States of America and defendant Jeffrey R. Wright ("Wright") pursuant to Internal Revenue Code Sections 7402 and 7407 (Title 26, United States Code):

1. The Court has jurisdiction over this action under 28 U.S.C. §§ 1340 and 1345 and 26 U.S.C. §§ 7402 and 7407.

2. On March 11, 2003, the United States commenced this action seeking to enjoin Wright and the other defendants permanently from acting as income tax return preparers and from engaging in conduct subject to penalty under I.R.C. Section 6694, "Understatement of Taxpayer's Liability by Income Tax Return Preparer."

3. The complaint alleged in material part that the defendants continually or repeatedly engaged in such conduct, understating the tax due (and overstating the refunds due) on customers' federal income tax returns by claiming false and inflated itemized deductions for charitable contributions and employee business expenses.

4. On July 30, 2003, the Court preliminarily enjoined the defendants (except for defendant Joe Gordon Shields, who previously entered into a permanent injunction by consent) from engaging in any conduct prohibited by I.R.C. Section 6694, including but not limited to overstating the allowable amount of charitable contributions and/or employee business expenses on the returns they prepared for compensation.

5. On April 14, 2004, the defendants herein, along with others, were indicted on related criminal charges in United States v. Samuel Joseph DeAngelo, et al., No. SA CR 04-68(A)-JVS.

6. On September 25, 2005, Wright entered into a Plea Agreement in the criminal case. He received a sentence of six months in a judgment entered October 1, 2007.

7. Wright has not been in the business of preparing income tax returns since well before he entered into his Plea Agreement. He has no intention of ever again preparing income tax returns for compensation.

8. To resolve the claims against him in the instant proceeding, Wright agrees to be bound by the terms set forth in the following paragraphs.

9. Pursuant to I.R.C. Section 7407(b) and I.R.C. Section 7402(a), Wright, along with any agents, servants, employees, attorneys, or other persons in active concert or participation with him, is HEREBY PERMANENTLY ENJOINED from:

    a. Acting as a tax return preparer for compensation within the meaning of I.R.C. Section 7701(a)(36);

    b. Engaging in any conduct subject to penalty under I.R.C. Section 6694, including but not limited to preparing tax returns or claims for refund that overstate the allowable amount of charitable contributions and/or employee business expenses; and

    b. Engaging in any other conduct that interferes with the proper administration and enforcement of the internal revenue laws.

10. Nothing in this Permanent Injunction by Consent shall be construed to compromise, preclude or otherwise affect any other proceedings against or involving Wright, civil or criminal, whether not pending or hereafter commenced. The United States may engage in discovery under the Federal Rules of Civil Procedure to monitor compliance with the terms of this injunction, and this Court shall retain jurisdiction for the purpose of implementing and enforcing this injunction and all additional orders necessary and appropriate to the public interest. Wright waives any right he may have to appeal from this Permanent Injunction By Consent.

11. The parties hereto shall bear their respective costs, including any possible attorneys' fees or other expenses of this litigation.

                Thomas P. O'Brien
                United States Attorney
                Sandra R. Brown
                Assistant United States Attorney
                Chief, Tax Division
                Robert F. Conte
                Assistant United States Attorney
DATED: August 20, 2008
                W. Carl Hankla
                Trial Attorney, Tax Division
                U.S. Dept. of Justice
DATED: August 19, 2008
                Jeffrey R. Wright
                909 Scenic Way
                Ventura, CA 93003

                Pro Se
IT IS SO ORDERED, ADJUDGED AND DECREED.

DATED: August 26, 2008.

                United States District Judge

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