The U.S. government is claiming huge losses in a lawsuit it filed against a local tax preparer and his business partner from the Midlands that seeks to bar them from filing federal tax returns.
According to the complaint filed in U.S. District Court, Stacy Middleton of Charleston and George Jenkins of Blythewood are alleged to have “prepared returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes.”
The government estimated its losses could total $55 million.
Middleton and Jenkins work through a company called MBM Tax and Accounting Services LLC.
The lawsuit states the two men prepared returns that unlawfully created fictitious deductions and credits as well as overstating and duplicating existing deductions and credits.
The complaint also alleged Middleton created fraudulent Internal Revenue Service 1099 forms on behalf of customers, creating fake income to enable him to claim the Earned Income Tax Credit on behalf of those individuals.
The government said the IRS has examined 842 returns prepared by the two men, and more than 93 percent of those examinations resulted in an adjustment to their clients’ tax liability.
Middleton prepares about 4,000 tax returns a year, the lawsuit said.
No one answered the telephone today at two local numbers listed for MBM, The Post and Courier left a voice message seeking comment at one number. The messaging system at the other number was full.
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