Federal Court Finds Louisiana Tax Return Preparer in Contempt and Orders Disgorgement of Ill-Gotten Fees and Litigation Costs as Sanctions

Note: View order here.

Last week, a federal court in Baton Rouge, Louisiana, found Whylithia R. Robinson in contempt for violating a permanent injunction that prohibited her and her business AAA Tax Service LLC from preparing, filing, or assisting in the preparation or filing of federal tax returns for others.

The United States filed a complaint against Robinson and AAA Tax Service on Jan. 23, 2023. According to the complaint, Robinson prepared and filed 2,629 federal income tax returns for customers though AAA Tax Service from 2019-2021. The complaint further alleged that Robinson displayed a pattern of filing tax returns during this period that understated the customer’s tax liabilities and overstated tax refunds by fabricating business losses, claiming false charitable donations, or falsely claiming education credits for customers who were not entitled to them. On April 23, 2023, the court issued a default judgment of permanent injunction that barred Robinson and AAA Tax Services from preparing tax returns for others.

Following a hearing last week, the court found that the United States demonstrated that Robinson violated the permanent injunction by continuing to prepare 227 tax returns for others. For these violations, the court held Robinson in civil contempt and ordered as sanctions that she disgorge $68,100 in ill-gotten fees she earned in violation of the injunction and reimburse the United States its costs of litigation and travel expenses.

Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers 10 tips to avoid tax season fraud and ways to safeguard personal information.

In the past decade, the Justice Department’s 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.