A federal court has barred a Michigan couple, Damian and Holly Jackson of Detroit, from preparing federal tax returns for others, preparing their own federal tax returns using false 1099 forms, and promoting an alleged tax-fraud scheme based on the frivolous “redemption” theory, according to the U.S. Justice Department.
The government complaint alleges that the Jacksons and their business, Diamond & Associates Enterprises, operated Diamond Tax Services and promoted a scheme involving the preparation of fraudulent federal income tax returns for customers seeking large tax refunds based on a frivolous tax-defier theory called “redemption” or “commercial redemption.”
The complaint alleges that Damian Jackson, a minister at the Perfecting Church in Detroit, prepared tax returns that claimed fraudulent refunds based on fabricated income tax withholding reported on false IRS 1099 forms. Allegedly, tax returns prepared for at least 182 customers under the auspices of Diamond Tax Services sought over $29 million in fraudulent refunds, and the Jacksons’ federal returns requested more than $2.5 million in bogus refunds.
The complaint alleges that the defendants’ scheme has caused the IRS to issue at least $1.6 million in erroneous refunds to the defendants’ customers. According to the complaint, the Jacksons also solicited up-front fees of between $500 and $995 from customers and received a 10 percent cut of any refund issued by the IRS.
The injunction suit remains pending against a third defendant.
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