An Aurora-based tax preparer has repeatedly prepared federal income tax returns for customers that claim losses for non-existent businesses and inflated or fabricated deductions so the customers could receive income tax refunds, the U.S. Department of Justice alleged today.
A lawsuit filed today by prosecutors in Denver asks that George Thomas Gaines and his companies, G&G Tax Service and American Benefits, be barred from preparing federal tax returns.
The lawsuit – which asks for a permanent injunction against Gaines and his companies – claims that between 2004 and 2007 the Internal Revenue Service identified 210 returns prepared by Gaines that contain understatements of customers’ tax liabilities.
The 210 is from a total of 218 returns that were audited.
The total amount of taxes owing after the audits exceeds $940,000, according to the complaint.
Gaines continue preparing tax returns for the tax years of 2007, 2008 and 2009.
The government alleges that the total loss of revenue from 2004 through 2009 could nearly $4 million.
The complaint said that Gaines’ business is located at 1306 S. Chambers Road in Aurora.
Prior to starting his business in Colorado, investigators allege that Gaines operated a similar tax preparation business in Mississippi.
While Gaines was in Mississippi, the IRS investigated his tax preparation activities and assessed penalties in May 2008 against Gaines for willful or reckless understatements relating to 13 different taxpayers’ federal returns, according to the lawsuit.
After moving to Colorado, prosecutors allege he continued to prepare returns that understated his customers’ tax liabilities.
The lawsuit says that in an effort to constrict Gaines’ ability to continue the alleged scheme, the IRS has revoked Gaines’ electronic filing identification number to prevent him from filing federal income tax returns electronically.
However, investigators claim he continues to file federal income tax returns using paper filings.
Howard Pankratz: 303-954-1939 or hpankratz@denverpost.com.
