Disgorgement of Tax Prep Fees and Permanent Injunction Against Texas Tax Return Preparer by Federal Court

A tax preparer in the Galveston region has been permanently barred from filing federal tax returns for others and from owning, running, or franchising any tax return preparation business by a federal court in the Southern District of Texas.

According to the amended complaint, between 2017 and 2022, Johnathan Perry prepared more than 4,000 federal income tax returns using the business names X-Pert Taxes and JOHNATHAN PERRY. The amended complaint alleges that in many of these tax returns, the defendants significantly inflated the customers’ refunds by making up or exaggerating income and expenses related to employees, household help, and businesses, and by claiming education credits and fuel excise tax credits to which the customers were not entitled.

Perry must pay back $324,432 to the IRS for tax preparation services as part of the injunction decision. A copy of the restraining order must be sent to anyone whose federal tax returns Mr. Perry, X-Pert Taxes, or JOHNATHAN PERRY has prepared. In addition to posting the injunction on all of his online and offline marketing channels, Mr. Perry must do so at all physical locations where his tax preparation services are offered.

The news was announced by Justice Department’s Tax Division Deputy Assistant Attorney General David A. Hubbert.
Return preparation fraud is one of the IRS’s Dirty Dozen Tax Scams, so taxpayers should be wary of any preparer they use. Taxpayers can get a head start on their returns by following the IRS’s advice on how to appropriately submit forms and how to select a tax return preparer. Taxpayers should be wary of “ghost” tax preparers whose unwillingness to sign a return is one of the red flags the IRS has issued with the debut of its free directory of federal tax preparers.

In addition, taxpayers with an AGI below $73,000 can use IRS Free File, a public-private partnership that provides free online tax preparation and filing choices through IRS partner websites. Over-earners can use IRS Free File to get federal tax forms electronically and file them online without paying a fee.

The Tax Division has successfully obtained injunctions against hundreds of dishonest tax preparers over the past decade. The Department of Justice has a webpage where details regarding these lawsuits can be found. Here is an alphabetical list of those who have been barred from helping others with their tax returns or advocating tax avoidance strategies.