On Thursday, a federal court in the Southern District of Florida held two individuals, as well as the company they allegedly co-own, in contempt for violating a preliminary injunction that restricted their tax preparation activities. The court’s order notes defendants “admit that sufficient evidence exists to hold them in contempt of court for violating the preliminary injunction.”
The United States filed a complaint against Wendell Devallon, Berald Dominique, and Tax Time Group Inc. on Dec. 4, 2020, seeking to enjoin them from preparing returns for others. The complaint alleges that Devallon and Dominique co-own Tax Time Group Inc., which has its principal place of business in North Lauderdale, Florida, and additional offices in Charlotte, North Carolina; Niagara Falls, New York; Buffalo, New York; and Evansville, Indiana. According to the complaint, defendants prepared tax returns for customers that claimed fraudulent self-employment expenses, fictitious education credits, and fake charitable contributions, among other schemes. The complaint also alleged that Devallon and Dominique acted as “ghost” preparers, meaning that they acted as paid tax return preparers but did not sign the returns they prepared, as required by law.
On Jan. 13, 2021, the court entered a stipulated preliminary injunction against all three defendants, requiring them to “cease all tax preparation and filing services” at certain offices, including a location at 995 SW 71st Avenue, North Lauderdale, FL 33068.
On May 3, 2021, the United States sought an order to show cause and a temporary restraining order, alleging that Devallon, Dominique, and Tax Time Group Inc. were violating that preliminary injunction. According to the show cause motion, defendants continued to prepare returns out of the 995 SW 71st Avenue location but masked their involvement in the prohibited activities by submitting those returns through entities purportedly based in Indiana and Pennsylvania. The motion for a temporary restraining order alleged that proceeds from the prohibited return preparation were being deposited into five bank accounts, three of which were held in the name of nominee entities. On May 12, 2021, the court entered a temporary restraining order prohibiting Devallon, Dominique, and Tax Time Group Inc. from accessing the funds in those five bank accounts.
On Thursday, the United States and defendants jointly moved for an order holding defendants in contempt, which motion was granted the same day. The court will determine appropriate sanctions at a later date.
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.