The Garden City Telegram

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Tax preparer facing federal lawsuit

Published 3/11/2010 in Local News

By SHAJIA AHMAD

sahmad@gctelegram.com

The U.S. Justice Department is suing the owner of a Garden City tax preparation business, alleging that his clients owe more than $2 million dollars in unpaid taxes.

The civil lawsuit against Jose Lares, Holcomb, and his business, Dinero Rapido Tax Services, was filed Wednesday in U.S. District Court in Wichita. The suit seeks to permanently bar Lares from the tax-preparation business.

The lawsuit alleges Lares claimed false dependent exemptions and false filing statuses on customers' returns and says IRS audits showed an average tax loss of more than $6,000 per return.

In 2006 and 2007, the IRS conducted an extensive examination of 169 federal tax returns prepared by Income Tax Dinero Rapido, 1210 Fulton St., for the 2004 through 2006 tax years, according to U.S. District Court documents.

According to the suit, as a result of its extensive investigation, the IRS discovered numerous examples of false items on returns, including incorrect filing statuses, such as claiming head of household status for taxpayers who did not qualify, false or overstated employee business expenses, improper earned income tax credits, false or overstated Schedule C business expenses, and false dependent exemptions.

Lares, who has prepared federal tax returns through Income Tax Dinero Rapido since at least 2003, said this morning he was not aware of the civil suit, has had no communication with his St. Louis-based attorney, the IRS, or the Department of Justice about the matter, and denied any wrongdoing in regards to accusations he filed false information with the IRS.

"We have a case pending with the IRS, and my attorney has been trying to get in contact with them," Lares said. "I didn't know there'd been any action taken at this time."

He had no further comment on the suit.

For the 2008 and 2009 tax years, Lares was the signed preparer for more than 4,065 federal tax returns prepared by Dinero Rapido Tax Services, according to court documents.

The IRS also extensively examined 19 federal income tax returns prepared by Dinero Rapido Tax Services for the 2007 through 2008 tax years. According to the suit, the audit revealed that Lares, through Dinero Rapido Tax Services, repeatedly signed federal tax returns for 2007 and 2008 claiming false dependent exemptions and false head of household filing statuses, with total additional tax owed of more than $115,000.

Lares and his sister, Maricela Lares, who also previously worked at Income Tax Rapido Dinero, are the only persons known to the IRS who currently prepare returns at Dinero Rapido Tax Services.

Dinero Rapido — meaning 'fast money' — has marketed its services to the area's Spanish-speaking community, and the suit contends many of Lares' clients were recent Mexican immigrants with little knowledge of U.S. tax laws.

Sometime after the IRS's first investigation, Lares's former business partner, Aracely Romo, disappeared, and the lawsuit states her present whereabouts are unknown. After Romo left the business, Lares continued to operate the business, which was known as Income Tax Dinero Rapido prior to Romo leaving the business, signing most of the federal tax returns prepared by the business in 2008. Lares changed the name of the business to Dinero Rapido Tax Services after Romo's departure.

Lares said today that Romo is living in Garden City, although she could not be reached for comment through him this morning.

The suit also alleges that Lares submitted false federal income tax returns to fraudulently obtain a mortgage loan for a $186,000 residence in Holcomb, purportedly providing copies of his 2005 and 2006 federal income tax returns with the application. IRS records reveal, however, that even though Lares was working as a return preparer in 2005, he did not file a federal income tax return for that year and reported only a wage of $15,580 from his tax preparing business on his 2006 federal income tax return, according to court documents.

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