PORTLAND, (AP) – The federal government on Friday filed suit against jailed tax activist Carol Palesky of Topsham, claiming she inflated deductions and credits for clients for whom she prepared federal tax returns.

The suit, filed in U.S. District Court, also seeks to bar Palesky from preparing federal tax returns for others or representing anyone in federal tax matters. Her tax-preparation and accounting business is called East Accounting Services, the government said. The Justice Department alleges that returns Palesky prepared between 2003 and 2005 overstated deductions and credits for her customers, resulting in an understatement of their tax liabilities.

The suit says the Internal Revenue Service issued erroneous returns based on fraudulent returns prepared by Palesky, then had to audit her customers and attempt to recoup the money. It says that caused harm to her customers and to the government.

Palesky is currently serving a 16-month sentence in the Maine Correctional Center in Windham after pleading guilty to one count of theft by misapplication after taking funds from one of her business’s customers.

She was convicted in 1987 by a federal jury for embezzling from a Brunswick law firm where she worked as a bookkeeper. In 1998 she was convicted of aggravated forgery after she altered state referendum petitions. In 2004, Palesky led an unsuccessful referendum that proposed capping property taxes at 1 percent of assessed value.