A federal court in the Southern District of Florida has ordered a Miami-area tax preparer to pay a $403,969.70 contempt sanction for violating a permanent injunction that barred her from preparing, filing or assisting in the preparation or filing of federal tax returns for others.
The United States filed a complaint against Milagros Espinal on Feb. 7, 2011, that alleged that she had prepared returns for customers that claimed deductions for fraudulent medical expenses, charitable contributions and unreimbursed employee business expenses. According to the complaint, an IRS review of returns she prepared uncovered errors in 97% of the returns the agency examined. The parties contemporaneously filed a consent order, in which Espinal agreed to a full bar on return preparation. On Feb. 16, 2011, the court issued a permanent injunction.
On Aug. 18, 2021, following an evidentiary hearing, the court found that the United States proved by clear and convincing evidence that Espinal continued to prepare returns in violation of the injunction and held Espinal in contempt. The court stated in its order that it would decide the appropriate contempt sanction at a later date. Today, in ordering her to pay $403,969.70 to coerce her compliance with the injunction, and to compensate the Treasury for the harm Espinal caused, the court found that the government “had demonstrated that $395,280 is a reasonable approximation of [Espinal’s] ill-gotten gains.” According to the order, the balance of the sanction ($8,689.75) represents the costs the United States incurred to investigate and litigate Espinal’s actions violating the court’s injunction.
Acting Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.
Return preparer fraud is one of the IRS’s’ Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. (More information can also be found here.) The IRS has information on its website for choosing a tax preparer, has launched a free directory of federal tax preparers, and offers information on how to avoid “ghost” tax preparers, whose refusal to sign a return should be a red flag to taxpayers.
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.