Pugh Brothers Barred from Tax Preparation in Fraud Injunction
Fraud Estimated at Over $2.4 Million
The United States government first filed charges against the pair for their fraudulent tax preparation techniques in June of 2007. In a Department of Justice statement from June 21, 2007, we learn that the brothers were charged with preparing over 80 fraudulent tax returns.
The scheme used to defraud the U.S> government was basic. Judge Nicholas G. Garaufis of the U.S. District Court for the Eastern District of New York laid out the details in the civil court injunction order. They simply claimed a non-existent loophole on customers' tax returns. In essence, the two claimed that compensation paid for work was not taxable income.
This particular scam was known as the "claim of right tax-evasion" scheme. It has not been made known if the company's clients were aware of the scam. Archie and Theodore Pugh were charging them a $250 fee for their tax preparation services.
If you are a former client of the Pugh brothers' business, Archie's Tax and Accounting Service in Jamaica, N.Y., your personal information will be provided to the Justice Department. This information will include your name, social security number, email, and residential address.
Together, the brothers are responsible for over $2.4 million in lost revenue to the U.S. Treasury. The exact amount of money lost is not yet known.
The Pugh brothers aren't the only ones who've attempted to run this type of scam. Almost 300 injunction orders have been filed since the year 2001 against those who prepare fraudulent tax returns or implement a tax fraud scheme.
The Internal Revenue Service has published the updated list of tax scams in February, 2007. The list is best known as "The Dirty Dozen". The "claim of right tax-evasion" scam run by the Pugh brothers ranks 12th on the list. It falls into the category of fraud referred to as "Frivolous Arguments".
In a quote from the I.R.S. website, IRS Commissioner Mark W. Everson says, "Taxpayers shouldn't let their guard down," He goes on to state, "Don't get taken by scam artists making outrageous promises. If you use a tax professional, pick someone who is reputable. Taxpayers should remember they are ultimately responsible for what is on their tax return even if some unscrupulous preparers have steered them in the wrong direction."
Sources
Department of Justice FRIDAY, NOVEMBER 16, 2007
http://www.usdoj.gov/opa/pr/2007/November/07_tax_926.html
Department of Justice THURSDAY, JUNE 21, 2007
http://www.usdoj.gov/tax/txdv07443.htm
Internal Revenue Service
http://www.irs.gov/newsroom/article/0,,id=167983,00.html
Published by neonola
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- This original injunction was filed 5 months ago.
- The exact dollar amount of the damages is still unknown.
2 Comments
Post a CommentYeah, not filling out that form would end a job interview PDQ. Thanks for the comment!
Would be interesting to know the details of the scam. The Federal Income tax was levied for two years, with voter consent, to pay off the cost of World War 2. Since that time, we volunteer to pay taxes when we fill out a W-4 form. Of course you do not get hired if you were to refuse to fill out the "mandatory" form. The IRS is actually breaking the law when they freeze bank accounts and other activies; they are rather like a collection agency for the government, rather than a government department. I read and reread the passage about citizens being taxed and it is actually illegal, unless we give our okay (see W-4 form).