The Justice Department has asked a federal judge to shut down two metro Atlanta tax preparation businesses for what government lawyers call “brazen” tax fraud on a “massive” scale.
According to court documents filed Thursday, federal prosecutors allege brothers Larry J. Heath and Andrew R. Heath systematically bilked the federal government out of as much as $108 million in unpaid taxes by filing fraudulent tax returns for customers. The government asked the court to close the brothers’ two businesses, Heath’s Income Tax II in Cartersville and Excellent Tax Service in Acworth, and bar them from filing tax returns for others.
“Larry Heath’s and Andy Heath’s fraudulent conduct is brazen. Their tax-fraud schemes include manufacturing expenses, deductions, credits and other adjustments for their customers to illegally inflate the tax refunds that their customers receive from the IRS,” the Justice Department claimed in its 43-page complaint.
Summons have been issued for the Heaths to appear in court, but no further action has been taken. No attorney is listed for the brothers and there was no answer to calls at either business.
According to a press release by the Justice Department, investigators reviewed thousands of tax returns prepared by the Heaths and found 94 percent included a claim for a refund.
Larry Heath has been preparing tax returns since the early 1990s, although he is not an attorney or an accountant and does not hold any professional licenses, prosecutors said in their complaint.
The IRS suspended Larry Heath’s Electronic Filing Identification Number in 2010 after noting a “large number of erroneous tax returns that he was preparing,” prosecutors said. Prosecutors claim Heath twice sold the business to a partner and used the partner’s EFIN number to continue filing returns from the same Cartersville location.
According to the complaint, Andrew Heath has been preparing tax returns since at least 2007, initially working for his brother before opening his Acworth business in 2011. Prosecutors allege Andrew Heath uses the same tactics as his brother, using “patently false information” to claim millions in refunds for customers.
Prosecutors allege the Heaths faked business losses, expenses and charitable contributions as grounds for deductions. IRS investigators examined 2,600 returns filed by the Heaths between 2007 and 2012 and found the average tax deficiency per return to be $2,806, the complaint states.
Along with shutting down their businesses, prosecutors are asking the court to require the Heaths to contact all of their past customers to inform them of the alleged fraud.