On April 16, a federal court in Orlando, Florida, ordered that Patrick Clarke disgorge $500,000, and Ruby Rodriguez disgorge $100,000, of the proceeds they received for the preparation of tax returns, the Justice Department announced today. Clarke and Rodriguez agreed to the orders. On Nov. 13, 2017, the Court permanently barred Clarke, Rodriguez, Tax MD Inc., and V.I.P Tax Services Inc. from preparing federal tax returns for others. The civil injunction order, to which the defendants also agreed, was signed by Judge Carlos E. Mendoza of the U.S. District Court for the Middle District of Florida.
In April 2016, the United States filed its civil complaint against Clarke and Rodriguez seeking an injunction prohibiting them from acting as federal tax return preparers and seeking disgorgement of their gross receipts for the preparation of federal tax returns that reported false or fraudulent claims. According to the complaint, Clarke owned Tax MD Inc. and through it owned and operated tax return preparation franchises in Orlando, Tampa, West Palm Beach, and Hallandale, Florida. Also according to the complaint, Rodriguez managed one of Clarke’s stores in Orlando and owned V.I.P Tax Services Inc. As alleged, Clarke’s tax return preparers, including Rodriguez, fabricated business income and expenses to make fraudulent claims for the earned income tax credit and fabricated itemized deductions to generate larger refunds. The injunction entered in November stopped Clarke and Rodriguez from preparing tax returns for others, and today’s disgorgement order allows the government to collect proceeds they received from their tax preparation.
Return preparer fraud was one of the IRS’s Dirty Dozen Tax Scams for 2018 and taxpayers seeking a return preparer should remain vigilant. The IRS has some information on their website about selecting a return preparer and has launched a free directory of federal tax preparers.
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details(link sends e-mail).