An injunction can prohibit a preparer from filing federal tax returns for others. We generally reserve this targeted treatment when earlier compliance efforts failed.
This process allows the Department of Justice to shut down preparers when we identify a history of problems. We pursue injunctions against preparers with a history of not meeting due diligence requirements, including:
- Previous due diligence and other return preparer penalties
- Prior e-file warnings or suspensions
- A high percentage of clients whose claims were reversed or reduced by IRS
- Questionable claims for certain credits and/or Head of Household filing status
- Non-compliance related to preparer's personal or business tax returns
These preparers could also face criminal prosecution and/or additional penalties.
Cost to Government, Taxpayers and Clients
With this process, we can stop return preparers who are costing the government and their clients a great deal of money in overpayments. The preparers listed below were each permanently barred from preparing federal tax returns for others. Returns filed by these preparers resulted in over 120 million dollars in harm to the government and their clients.
Due Diligence Injunction Results
Department of Justice news releases announced injunctions against return preparers all involving Due Diligence violations.
- A federal court permanently barred Nathaniel Kimble, of Greenville, Mississippi, and his Greenville, Mississippi, business, Kimble Tax Service, from preparing federal tax returns for others. The complaint also alleged that Kimble knowingly prepared federal income tax returns for customers that understated the customers’ tax liability and overstated refunds they claimed by inflating or fabricating earned income tax credits that his customers were not eligible to take. (January 22, 2015) Read more about the Kimble injunction here.
- Federal court permanently barred Yonny Torres, who does business under the name Yonny's Income Tax in downtown Los Angeles, from preparing federal tax returns. Torres received the;civil injunction, for engaging in "dishonest conduct" when preparing federal income tax returns that contained false information that increased his clients' earned income credit (EIC) so their tax refunds would be fraudulently inflated. (April 23, 2013)
- Federal court permanently bars Lakeisha Pearson of Birmingham, Alabama from preparing federal tax returns for others. Pearson received the injunction for continually preparing federal tax returns she knew or should have known were not eligible to claim EITC and for not meeting her EITC due diligence requirements. Pearson operated under these business names: LGS Tax Service, Positive Endeavors LLC, and AGA Tax Service. (January 27, 2012).
- Federal Court Shuts Down Louisiana Tax Return Preparers, their alleged scheme included fabricating Schedule Cs, Profit or Loss from Business, to secure bogus earned income tax credits; deducting false employees business expenses and moving expenses on Schedule As, Itemized Deductions; and claiming unsupported education credits. (September 6, 2017)
- Federal Court Permanently Bars a Michigan and Illinois-Based Liberty Tax Service Franchisee from Preparing Federal Income Tax Returns, the compliant alleged that the defendants' employees prepared federal income tax returns containing false information in order to illegally generate higher tax refunds or higher refundable credits for their customers. (November 16, 2015)
- Consequences of Failing to Meet Your Due Diligence
- Refundable Credit Preparer Compliance - Focused and Tiered