When a Tax Return Preparer “goes rogue” …

From time to time I have wondered just what does a tax return preparer (TRP) have to do to lose his/her right to prepare tax returns for others. Well, even for aggressive TRP’s it can be difficult for the IRS to yank their ticket. That said, the recently decided case of United States v. Umbrella Fin. Servs., LLC, No. 3:22-CV-2759-D, 2024 BL 38604 (N.D. Tex. Feb. 05, 2024) lets us know that it can be done. It takes some effort, but it can be done.

In the US v. Umbrella, the government moved for a preliminary injunction against defendants Umbrella Financial Services, LLC (Umbrella), Kevin Murphy (Murphy), and Ashley Diondria Fisher (Fisher) preventing them from engaging in a variety of commercial tax preparation activities. On January 19, 2024 the court entered a stipulated preliminary injunction against Umbrella and Murphy. In the court’s memorandum opinion, the court addressed the remainder of the government’s motion, which applied to defendant Fisher. The court granted the government’s motion and entered a preliminary injunction against Fisher by separate order.

I am guessing that it is not a good thing when the government believes a TRP,

  • over the course of multiple years, in multiple states, has prepared fraudulent tax returns designed to inflate the amount returned to the taxpayer, thus increasing the commissions shared between the TRP and the TRP’s employer;
  • has engaged in fraudulent tax return preparation activity that has resulted in millions of dollars of “tax harm;”
  • has prepared tax returns that are chronically and intentionally falsified;
  • after being expelled by the IRS from its e-File program for filing fraudulent tax returns, obtained and used multiple EFINs (Electronic Filing Identification Numbers) in her aunt’s name and also improperly utilized EFINs  belonging to other individuals, so that the TRP could continue filing tax returns for her own financial gain;
  • aided her employer in “trafficking” EFINs—i.e., allowing her employer’s software licensees who were not approved by the IRS for their own EFINs to unlawfully use EFINs assigned to others;
  • is participating in systemic fabrications to further harm the internal revenue system;”
  • is repeatedly and intentionally understating a taxpayer’s liability when there is no reasonable basis for the position and the tax preparer knew or reasonably should have known of the position; and
  • intentionally prepared numerous tax returns that reported “nonexistent Schedule C businesses and expenses, phony household help income, and fake education credits,” which uniformly reduced her customers’ taxable income or tax due.

Well, the government alleged that Fisher engaged in all of the above conduct, and, according to the court’s opinion, adduced plenty of evidence that supported the above allegations and proved the government’s case:

These factors support the issuance of a preliminary injunction. The record establishes that the harm Fisher’s conduct has caused the United States is grave: she has repeatedly understated her customers’ tax liability, thereby depriving the government of duly owed taxes; she has continuously abused the IRS’s e-File program by filing tax returns under false names; and she has caused the IRS to expend significant time and funds to investigate her conduct. This conduct was ‘not a product of ignorance nor incompetence,’ but was intentionally carried out—in other words, ‘executed with scienter.’ Further, the conduct is recurrent: the government has proved that Fisher has continually engaged in it for at least six years. Finally, Fisher has neither admitted culpability nor made assurances that she will not engage in such conduct in the future. Rather, she continues to contend that the government’s action against her is a case of mistaken identity—that a different woman named Ashley is actually the person who should be sued. Considering these factors, as well as the totality of the circumstances, the court finds that injunctive relief is warranted to prevent the recurrence of Fisher’s conduct.

Like I said, it takes some effort, but it can be done.

Alright TRP’s – back to work.