Beaumont tax return preparer could lose business, accused of fabricating claims, charging unauthorized fees

BEAUMONT, Texas — The United States Department of Justice is seeking to shut down the business of a Beaumont tax return preparer for allegedly charging unauthorized fees and fabricating or improperly inflating claims on returns.

A civil complaint filed by the U.S seeks to strip Michelle Denise Johnston, who has operated Allen and Johnston Tax Services since 2011, of her tax return business and stop her from preparing federal income tax for others, according to a U.S. Department of Justice release.

The complaint claims that Johnston prepared and filed tax returns that understated her customers’ federal income tax liabilities by fabricating businesses and business expenses, improperly inflating such expenses for existing businesses, and fabricating or improperly inflating itemized deductions for casualty losses and mortgage interest deductions.

Johnston is also accused of engaging in a refund-skimming scheme that doubled her preparation fees. Customers would directly pay Johnston anywhere from $200 to $500 based on a tentative income tax return.

Johnston would then take the tentative return, inflate it with fabricated deductions, credits and losses, to create a larger refund, and file the fabricated return with the Internal Revenue Service. The inflated refund was then deposited with a third-party vendor, who would pay Johnston’s customers the amount shown on the tentative return and deduct a second preparation fee from the remaining funds.

According to the complaint, none of Johnston’s customers knew about this, because she would only give them either the incomplete copy of the return or a copy that was different than the one filed with the IRS.

Johnston is alleged to have prepared more than 3,000 tax returns for the 2018 through 2020 tax years and has cost the U.S. significant losses in tax revenue. Johnston is also accused of harming her customers, who may be liable for repayments of refunds claimed in their names, plus penalties and interest.

Written by Tiana Johnson

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