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Tuesday, August 16, 2016

Maryland Tax Return Preparer Held in Contempt of Court for Violating Court Order Barring Her from Preparing Tax Returns

Court Orders Return Preparer to Return to Her Customers the Portion of Their Refunds Diverted to Her Own Account

A federal court in Greenbelt, Maryland, held Barbara Lynn McCarthy in contempt for preparing federal income tax returns in violation of a prior order that prohibited her from acting as a return preparer.  In 2014, the District Court enjoined McCarthy, who formerly operated as Barbara’s Tax Service, from preparing tax returns.  

After entry of injunction, the Internal Revenue Service (IRS) discovered that McCarthy continued preparing tax returns despite the court’s order banning her from doing so.  The court held a hearing on Aug. 11, to determine whether McCarthy had prepared returns in violation of the court’s injunction.  At the hearing the government established that McCarthy violated the court’s order and the court has now ordered McCarthy to return to her customers the portions of their tax refunds McCarthy diverted to herself.  The court also ordered McCarthy to pay the United States $2,500 for her actions after the injunction.  Finally, the court ordered McCarthy to provide the government with a list of all tax returns she prepared since the injunction was put in place.    

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’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.

Press Release Number: 
Updated August 16, 2016