U.S. sues Bronx tax preparer over alleged refund-fraud scheme tied to high refund rate

The U.S. government filed a civil complaint in Manhattan federal court against Kaelima Melendez, 48, a Bronx tax preparer who operates Tax Hub on Southern Boulevard, a business recently renamed Elba’s Tax Service. From 2016 through 2021, authorities say 94% to 96% of the returns Melendez prepared were issued refunds. The complaint seeks an injunction barring Melendez from preparing federal tax returns, and Melendez has not been charged with a crime. The storefront associated with the business was shuttered this week.

According to the complaint, Melendez allegedly fabricated dependents, Social Security numbers, heads of household designations, expenses, and entire streams of income to secure larger refunds for clients. The filing notes that, for tax processing years 2016 to 2021, the vast majority of returns Melendez prepared included a request for a refund. Federal authorities say Melendez also used Electronic Filing Identification Numbers belonging to other accountants, and that Tax Hub never had its own valid EFIN.

The Internal Revenue Service conducted audits of 119 returns Melendez prepared from 2014 to 2020, finding 111 of those returns owed an average of about $4,841 in taxes. The complaint contends that by including fabricated and inflated items on the customers' federal returns, the refunds obtained could be unjustly increased and the customers’ tax liabilities reduced improperly. It also argues that such conduct could recur unless the court grants a permanent injunction barring Melendez from filing or preparing federal returns for others.

Melendez has not been charged criminally in connection with the matter. The civil action, filed in federal court, seeks permanent relief that would bar her from preparing or filing federal tax returns for others.

The case highlights ongoing concerns about tax-preparation practices and the risk to clients who rely on preparers for refunds, underscoring the importance of independent review and compliance by filing entities. The government says the injunction is necessary to prevent ongoing harm to taxpayers and the integrity of the tax system. The Bronx storefront’s closure and the name change to Elba’s Tax Service are noted in public records and local reporting.