Government wants to shut down Kentucky tax business over alleged fraudulent returns
Federal authorities want to shut down a Kentucky tax preparer who allegedly filed false returns for customers that could have cost the government more than $1 million.
Attorneys for the Internal Revenue Service filed a lawsuit Thursday seeking an injunction barring Brandon Ross Williams of Frankfort and Refund HQ LLC from preparing tax returns.
The complaint alleges the IRS discovered that returns prepared by Williams “often contain false, fraudulent and bogus claims” designed to get refunds that customers weren’t entitled to, or to inflate their refunds.
The schemes included using false income figures and claiming deductions and credits customers weren’t entitled to claim, often without their knowledge, according to the lawsuit.
In some cases, Williams included income and expenses on customers’ returns from businesses that didn’t exist, the lawsuit alleges.
“But for Mr. Williams’s conduct, the refunds issued would have been smaller or no refunds would have been issued at all,” the lawsuit says.
Williams could not be reached for comment Friday morning.
Secretary of State Michael Adams’ office administratively dissolved Refund HQ, which had a Frankfort address on Leonardwood Drive, in 2023 after it failed to file an annual report.
The complaint says Williams has run afoul of the IRS before.
The agency assessed $53,750 in penalties against him in 2015 and $23,970 in 2018 for not doing enough to check if customers qualified for the earned income tax credit before including it in their returns.
Williams became a paid tax preparer in 2002. His company has had other names, including Leading Edge, Leading Edge Tax Pros, Tax Pros, and Tax Pros Refund HQ, according to the lawsuit.
The lawsuit says the business had other tax preparers.
The document does not identify them, but says Williams acts as a “ghost preparer,” filling out returns but signing them with the names and tax-preparer identification numbers of other people in the office, also a violation.
Based on the volume of returns prepared by Williams and Refund HQ — about 2,500 a year — the IRS estimated the rigged returns could have cost the government more than $1 million in tax revenue annually, according to the lawsuit.
The complaint did not say how many years that estimate covered, but cited examples from 2021 and 2022.
For instance, for tax year 2022, Williams claimed one customer was self-employed with a dog-training business.
The man actually worked at a car dealership, didn’t have a dog business and didn’t tell Williams he did, according to the complaint.
Without the customer’s knowledge, Williams claimed $8,500 in income and $10,973 in expenses for the non-existent business, resulting in a loss of $2,473 that helped inflate the customer’s refund, according to the complaint.
In another example, Williams added $2,569 in fake supply expenses, $2,761 in phony meal expenses and inflated car and truck expenses by $2,887 on a woman’s return in 2022, resulting in a lower taxable income for her.
Investigators interviewed 32 customers, and Williams reported false business expenses for at least 18, the lawsuit says.
The lawsuit cites another example of Williams allegedly claiming a tax credit for a woman that she wasn’t entitled to, netting her a refund of $8,434 when she was actually due $4,540.
Others at Refund HQ also allegedly used improper deductions to boost customers’ returns.
In one example cited in the complaint, others at the business added $25,957 in phony expenses to a client’s 2021 return and $41,444 in fake expenses for 2022, resulting in reduced taxable income for both years.
The fake expenses cited in the returns included supplies, meals, utilities, car and truck expenses, and “other” expenses, the lawsuit says.
In addition to shorting the federal government on tax revenue, filing false returns hurts customers by causing them to have inaccurate returns and hurts honest tax preparation businesses by giving Williams a competitive advantage for business, the lawsuit says.
The lawsuit asks a judge to permanently bar Williams and Refund HQ from preparing tax returns and to shut down any web sites, phone numbers or emails used for tax-preparation services.
It also asks a judge to order Williams and the company to pay the government any “ill-gotten gains” from fees taken out of customers’ refunds, or from tax-prep payments from customers, on any return that included fraudulent information.
