Nestled between two buildings along upper King Street, a small, white, seemingly ordinary building is home to a tax service office. But it’s where tax preparer Stacy Middleton works and has swindled the U.S. government out of millions of dollars, according to federal authorities.

Inside that building, two women manned the phones on Tuesday afternoon. When asked to speak to Middleton, the woman at the front desk said he was with a client. A man’s voice could be heard with a woman in a separate office. A reporter with The Post and Courier was told to leave a message that was never returned by Middleton.

As first reported on, the federal government filed an injunction on Tax Day, seeking to stop Middleton and George Jenkins, another tax preparer named in the federal complaint, from preparing anyone else’s tax returns. Criminal charges have not been filed against the two men. But they may have cost the federal government $55 million, according to federal authorities.

The pair work for MBM Tax and Accounting Services LLC, which conducts tax preparations, bookkeeping, payroll and financial consulting services. Jenkins works out of the company’s Blythewood office.

The complaint was filed Monday in U.S. District Court and accuses Middleton and Jenkins of creating fake deductions and overstating and duplicating deductions and credits on their customer’s tax returns.

Out of more than 800 tax returns prepared by the duo that were examined by the Internal Revenue Service, 93 percent of them had adjustments to their client’s tax liabilities, according to federal authorities.

In all, the pair may have cost the federal government $55 million, according to federal authorities.

MBM has five offices around the state, according to the company’s website. Middleton is one of the company’s founders, the site stated. In 2007, Middleton and his partners stopped working as a partnership and started to operate a separate tax preparation business, but all operating under the same MBM name, according to federal documents. The offices operate separately, but pool funds for shared advertising expenses, stated court documents.

Between 2008 and 2011, Middleton and Jenkins prepared about 17,000 federal tax returns. Out of the 842 returns examined by the IRS, nearly all of them resulted in adjustments, a federal complaint stated. On average, the IRS estimates there was about a $3,285 deficiency per return. The government’s losses netted to $2,765,816, records stated.

Based on estimations by the IRS, to include the thousands of returns prepared by Middleton and Jenkins that have not been reviewed, the government may have lost as much as $55 million to Middleton and Jenkins’ alleged schemes, the federal complaint stated.

Middleton and Jenkins created fake deductions and credits or duplicated existing returns, according to court records. The pair are also accused of reporting nonexistent business expenses and deductions on returns in order to create phony business losses to offset their customer’s wages. Those bonus expenses included medical, unreimbursed travel and cash charitable contributions.

The pair’s fraudulent tax returns have left many of their customers owing a pretty penny to Uncle Sam. Many of them are facing large income tax deficiencies or liability for sizable penalties and interest, according to the federal complaint. “It’s unfortunate and I hate this for these clients,” said Sharon Mann, president-elect of the S.C. Association of Certified Public Accountants.

Middleton and Jenkins are not licensed with the Board of Accountancy within the S.C. Department of Labor, Licensing & Regulation.

Lesia Kudelka, communications director for the Labor Department, said the IRS determines who can file tax returns. In the past anyone could file a return, she said. To represent a client before the IRS you had to have power of attorney and be an attorney, an accountant or enrolled agent, she said.

“Currently the IRS is implementing a program that requires you to be one of the above or a registered tax preparer, and the IRS handles the program, to prepare a tax return,” Kudelka stated in an e-mail.

Mann reminds the public that CPAs and accounting practitioners are credentialed and must abide by state law.

“I don’t want to downgrade unlicensed persons, but people need to do due diligence when looking at their returns,” she said. “They need to review them.”

Calls to the two other listed founders of MBM were not returned. A call to Jenkins was also not returned.

Reach Natalie Caula at 937-5594 or