DOJ takes action against brothers accused of $100M tax fraud
by Staff Report
Dec 27, 2012 | 7886 views | 0 0 comments | 53 53 recommendations | email to a friend | print
Two local brothers are the target of a federal complaint after they allegedly bilked the U.S. Treasury of millions.

The United States asked a federal court in Atlanta to bar Larry J. Heath, who operates Heath’s Income Tax II in Cartersville, and his brother, Andrew R. Heath, who operates Excellent Tax Service in Acworth, from preparing tax returns for others, the Justice Department said in a press release Friday.

In a 43-page complaint filed in the United States District Court for the Northern District of Georgia Atlanta Division on Thursday, the U.S. said the Heaths repeatedly prepared federal tax returns that unlawfully understated customers’ federal tax liabilities.

Outlined in the suit is a history of the pair concocting bogus losses, expenses, education credits, business expenses and charitable contributions, which they falsely reported on customers’ federal tax returns. The businesses operated by the Heaths — Heath’s Income Tax II, 278 Nelson St., Cartersville, and Excellent Tax Service, 5104 Cherokee St., Acworth — collectively could have caused more than $108 million in damage to the government, according to the complaint.

In the complaint, the government states that Larry Heath has been preparing tax returns since the early 1990s and neither Larry Heath nor Andrew Heath “is not an attorney, Certified Public Accountant or enrolled agent, nor does he hold any other professional licenses or certifications.”

According to the complaint, the Internal Revenue Service previously suspended Larry Heath’s IRS-issued electronic filing identification number because of the large number of erroneous returns he prepared. In response, the complaint alleges, Larry Heath purported to “sell” his business to two different individuals and used their EFINs to continue to file tax returns.

The suit alleges that the IRS has examined thousands of income tax returns prepared by the Heaths and their businesses and found that 94.5 percent of tax returns required IRS adjustments. From 2007 to 2010, the Heaths, whose businesses relied “almost exclusively on word-of-mouth advertising,” almost quadrupled the number of tax returns they prepared — processing 2,677 in 2007 to 10,399 in 2010.

“The scope of Larry Heath’s and Andy Heath’s brazen misconduct is longstanding, wide-ranging and pervasive,” the suit reads. “... Indeed, Larry Heath’s and Andy Heath’s fraudulent conduct has continued unabated despite the IRS’s investigation of their businesses, as well as thousands of IRS audits of their customers.

“Moreover, Larry Heath and Andy Heath have not meaningfully curtailed their improper conduct, even with increased IRS scrutiny of their activities in the past few years.”

The complaint goes on to describe the damage inflicted on customers and the federal government and asks the court to issue an injunction prohibiting either of the brothers from preparing tax returns, owning or managing a tax return preparation business, and other actions related to the federal income tax system.

Claiming bogus tax refunds is one of the IRS’s Dirty Dozen Tax Scams. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers, according to the press release. Information about these cases is available on the Justice Department website.