Two tax preparers accused of swindling the federal government out of millions are not allowed to touch another person’s federal income taxes ever again.
A permanent injunction was filed Tuesday against Stacy Middleton and George Jenkins, both of them tax preparers for MBM Tax Services. Middleton worked out of the Charleston office on King Street. Jenkins worked out of the company’s Blythewood office.
The company’s website was no longer available on Wednesday. In its place, a message stated the website domain name had expired on July 16 and is pending renewal or deletion. No one answered the phone at the Charleston office on Wednesday afternoon. Middleton’s attorney did not return a request for comment. Jenkin’s attorney could not be reached for comment.
The federal government had previously filed an injunction on Tax Day, seeking to stop Middleton and Jenkins. Criminal charges have not been filed against the two men. But they may have cost the federal government $55 million, according to federal authorities.
As part of the injunction, Middleton was ordered to contact every person whom he prepared federal taxes for after Jan. 1, 2009, according to court filings. He must inform them about the injunction and send them a copy of it. He must also submit the names of all of his federal tax preparation customers. Middleton was also ordered to publish the injunction, at his own expense, in The Post and Courier, according to the filing.
The complaint filed against Middleton and Jenkins accuses them of creating fake deductions and overstating and duplicating deductions and credits on their customers’ tax returns.
Out of more than 800 tax returns prepared by the duo that were examined by the Internal Revenue Service, 93 percent had adjustments to their clients’ tax liabilities, according to federal authorities.
The pair’s allegedly fraudulent tax returns have left many of their customers owing money to the IRS. Many of them are facing large income tax deficiencies or liability for sizable penalties and interest, according to the federal complaint.
MBM has five offices around the state, according to the company’s website before it was taken down. 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.
Middleton and Jenkins allegedly 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.
Middleton and Jenkins are not licensed with the Board of Accountancy within the S.C. Department of Labor, Licensing & Regulation.
Reach Natalie Caula at 937-5594 or Twitter.com/ncaula.
Two South Carolina accountants, including one in Charleston, at MBM, are accused of preparing returns unlawfully. Their scheme allegedly resulted in the loss of $55 million to the U.S. government. (Grace Beahm/postandcourier.com)×