Tax Preparer And His Company Permanently Barred From Preparing Federal Tax Returns For Others; Defendants To Pay Disgorgement To The United States

 

 Audrey Strauss, the United States Attorney for the Southern District of New York, announced that U.S. District Judge Jed S. Rakoff entered an order today permanently barring RAFAEL ALVAREZ (“ALVAREZ”) and ATAX New York LLC (“ATAX NEW YORK”) from, among other things, preparing federal tax returns for others.  In its civil complaint, the United States alleged that ALVAREZ and ATAX NEW YORK had prepared and filed fraudulent tax returns on behalf of their customers in which they falsely reduced their customers’ tax liabilities and generated tax refunds to which those customers were not entitled.  According to the complaint, ATAX NEW YORK filed over 36,000 tax returns on behalf of its customers from 2016 to 2019.

Manhattan U.S. Attorney Audrey Strauss said: “This Office will take appropriate actions to shut down tax preparation businesses that prepare and file fraudulent returns and unfairly shift the tax burden to honest American taxpayers.”

After the Government filed its complaint, ALVAREZ and ATAX NEW YORK consented to the entry of a permanent injunction and admitted, among other things, that:

• Between 2016 and 2019, they prepared and filed many federal income tax returns for ATAX NEW YORK’s customers that included claims of expenses, losses, or “head of household” status that lacked adequate supporting information or documentation.
   
• These unsupported entries caused the customers’ tax liabilities to be substantially understated.
   
• They had no adequate basis for including these entries on their customers’ returns.

The Government’s complaint also asked the Court to order disgorgement of the net profits that ALVAREZ and ATAX NEW YORK earned for preparing federal tax returns in which they made reckless or fraudulent claims with respect to their customers’ federal income tax liability.  As part of today’s court-ordered resolution, ALVAREZ and ATAX NEW YORK agreed to pay $159,600 to the United States in disgorgement.

Ms. Strauss thanked the Internal Revenue Service’s Small Business/Self-Employed Division for its invaluable assistance in this matter.