Federal Court Holds West Palm Beach Tax Preparer in Contempt Orders: To Disgorge his ill-Gotten Gains and Pay Attorneys’ Fees

Federal Court Holds West Palm Beach Tax Preparer in Contempt Orders: To Disgorge his ill-Gotten Gains and Pay Attorneys’ Fees

The Federal Court in West Palm Beach, Florida held that Jeffrey Cadet violated a permanent injunction entered against him on 12 August, 2019, which barred him from acting as a federal tax return preparer or requesting, assisting in, or directing the preparation or filing of federal tax returns for others.

In the present case plaintiff, the United States filed a Motion for Order to Show Cause asking the court to hold Cadet in civil contempt based on evidence that he was preparing tax returns without signing them as the return preparer. The investigation was undertaken by the Tax Division as part of its effort to monitor the conduct of return preparers who have been enjoined from preparing returns for others, and to hold accountable those who violate their injunction.

Defendant Jeffrey Cadet is an unenrolled tax return preparer who resides in Wellington, Florida. Cadet has been preparing returns since 2012. He took a six-week training course regarding such topics as basic income, filing status, dependents, Earned Income Tax Credit “EITC”), and the deductibility of expenses with Jackson Hewitt Tax Services, Inc. in 2012.

The defendant, through Kersh Tax Service LLC and for compensation, prepared false and fraudulent federal income tax returns that understated their customers’ federal income tax liabilities and overstated refunds to which they are entitled. The defendants were tax return preparers as defined in 26 United States Code Section 7701(a)(36).

As the Court noted, Cadet did not respond to the motion or contest the evidence against him.

Subsequently evidence was presented by the United States, the Court found that Cadet violated his injunction by continuing to prepare returns for customers and held him in civil contempt.

To remedy his contempt, the Court ordered Cadet to disgorge $24,410 in ill-gotten fees he received for conduct that violated the injunction.

The Court also ordered Cadet to pay the United States $7,386.39 to reimburse the government for the attorneys’ fees it incurred to investigate and prosecute his post-injunction conduct.

Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.

Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers, including “ghost preparers” who do not sign the returns they prepare. The Internal Revenue Service (IRS) has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers.