Federal Court Shuts Down Miami Tax Preparer

April 26, 2010 - A federal court has permanently barred David Santiago and his business, Santiago Investment & Consulting Inc., both based in Miami, from preparing federal tax returns for others, the Justice Department announced today. The court in Miami found that Santiago and his company had falsely claimed the first-time homebuyer tax credit on numerous returns they prepared. The civil injunction order, entered by U.S. District Judge James Lawrence King, requires Santiago to notify his customers of the injunction order. Congress enacted the credit in 2008 to strengthen the real estate market and help the economy. Persons who have not owned a home in the previous three years can claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. The credit has since been expanded to allow, under certain conditions, current homeowners to claim the credit for a purchase of a new home. But in order for a taxpayer to claim the credit a home must have actually been bought.

According to the court’s order, Santiago claimed the credit on customers’ returns even though he knew they had not bought new homes. The court also found that Santiago claimed fabricated business deductions on some customers’ returns and failed to keep adequate customer records or copies of the returns he prepared. A tax preparer’s failure to keep adequate records can subject him to civil penalties and an injunction.

Last October a federal court in Texas permanently barred a woman from preparing returns for others in a case where the Justice Department alleged abuse of the homebuyer credit and other tax law provisions.