By Matt Tomsic
Published April 22, 2013
Investigators have accused tax preparers in Charleston and Blythewood of filing false claims and deductions from 2008 through 2011, cheating the government out of as much as $55 million in taxes.
Investigators filed the injunction April 15 against Stacy Middleton of Charleston and George Jenkins of Blythewood, who both prepare federal tax returns through a business they operate called MBM Tax and Accounting Services, according to a civil complaint. Authorities have asked that a judge bar them from preparing tax returns for anyone but themselves. MBM also provides bookkeeping, payroll and financial consulting services. MBM began as a partnership, but in 2007, the company split, operating separate tax preparation businesses that share the name MBM. Middleton operates in Charleston; Jenkins operates in Columbia.
Middleton and Jenkins prepared 17,000 federal tax returns from 2008 through 2011, according to court documents, and the Internal Revenue Service examined 842 returns, adjusting 789 of them and pegging lost government revenue at $2.8 million based on false claims and deductions. The IRS estimates the government could have resulted in as much as $55 million in lost revenue from the 17,000 returns filed from 2008 through 2011.
“The examinations revealed that Middleton and Jenkins created fictitious deductions and credits or overstated and duplicated existing ones, on their customers’ returns,” according to the complaint. “Additionally, Middleton created fraudulent Forms 1099 on behalf of those customers, creating fake income to enable him to claim the earned income tax credit on behalf of customers.”
In one example cited by investigators, Middleton fabricated Forms 1099 for a customer identified as “K.B.,” who received only wage income in 2010. But Middleton submitted documents that said a company called Sparkle Clean paid K.B. $6,825 that year.
“In fact, Sparkle Clean did not pay any money to K.B., who later told the IRS that she had never heard of Sparkle Clean,” according to the complaint. “Likewise, Sparkle Clean had never heard of K.B.”
Reach Matt Tomsic at 843-849-3144.