Colorado Tax Return Preparer Incarcerated Until He Complies with Permanent Injunction

A federal judge in Colorado has ordered a tax return preparer to be held in custody until he closes his tax preparation business.  At the conclusion of a hearing today,  Senior District Court Judge John L. Kane for the District of Colorado found Gerardo Herrera in contempt for violating an earlier order that permanently barred him from the tax preparation business and immediately remanded him to the U.S. Marshal’s Service. 

The United States filed a complaint on Sept. 1, 2015, alleging that for at least three years, Herrera and his firm had systematically and repeatedly submitted false income tax returns by reporting extra dependents, claiming bogus deductions, and using improper tactics to understate tax liability.  On Jan. 7, Judge Kane issued an order of permanent injunction against Herrera prohibiting him from preparing tax returns.

The injunction also directed Herrera to provide a list of his customers to the United States, notify his customers of the injunction and file a sworn statement attesting that he had complied within 45 days of the injunction.  The United States asked the court to hold Herrera in contempt for his failure to comply with these provisions and alleged that he continued to operate two tax preparation offices and/or assist others in operating the offices.  After hearing testimony from two Internal Revenue Service (IRS) witnesses who had visited Herrera’s offices, Judge Kane found Herrera in contempt and ordered that he be held in custody until he purges his contempt by, among other things, notifying all his prior customers of the permanent injunction, providing a list of his customers to the United States, surrendering his Preparer Tax Identification Number (PTIN) and posting a copy of the injunction in his place of business.

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanks the revenue agents and revenue officers for their assistance in this civil case.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2016.  The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers.  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 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.