WASHINGTON – A federal court has permanently barred Karen Berry, Carla Berry and their tax preparation business, N.C.K. Services Inc., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, entered by Judge Virginia A. Phillips of the U.S. District Court for the Central District of California, also prohibits the Berrys from promoting or selling any tax service that advises customers to attempt to violate the tax laws.
According to the government complaint, the Berrys, who are sisters from Rialto, Calif., prepared returns claiming false and inflated itemized deductions for mortgage interest and unreimbursed employee business expenses resulting, in most cases, in undeserved refunds for their customers. According to the court’s order, the falsified tax returns cost the United States millions of dollars in tax revenue. The court also found that N.C.K. Services retained copies of legitimately prepared returns but destroyed copies of its fraudulently prepared returns.
As noted in the court’s order, Karen and Carla Berry had previously pleaded guilty to conspiring to defraud the United States, aiding and assisting in the preparation of a false tax return, and willfully filing a false tax return. They were each sentenced to six years in federal prison.
Return preparer fraud is one of the IRS’s “Dirty Dozen” tax scams for 2011. In the past ten years, the Justice Department’s Tax Division has obtained injunctions against hundreds of return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.