United States of America v. Montenegro et al
Filing
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ORDER OF PERMANENT INJUCTION. Granting 37 Motion for Permanent Injunction. File is closed. Signed by Judge Salvador Mendoza, Jr. (RG, Ops Supervisor)
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FILED IN THE
U.S. DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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Oct 02, 2017
SEAN F. MCAVOY, CLERK
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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UNITED STATES,
No. 16-CV-3186-SMJ
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Plaintiff,
ORDER OF PERMANENT
INJUNCTION
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v.
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JENNIFER SALGADO; JENNY'S
TAX SERVICES,
Defendants.
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Before the Court, without oral argument, is the parties’ Stipulated Motion for
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Entry of Final Judgment and Orders of Permanent Injunction, ECF No. 37. On
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October 25, 2016, the United States filed a complaint alleging that Defendants
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Jennifer Salgado and Jenny’s Tax Services (collectively “Defendants”) have
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engaged in a pattern of claiming on behalf of their customers false or inflated
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dependency exemptions and false or inflated Additional Child Tax Credits.
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The parties stipulate to resolve this matter through this Stipulated Order of
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Permanent Injunction against Jennifer Salgado and Jenny’s Tax Services.
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Defendants represent that they waive the entry of findings of fact and conclusion of
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law under Federal Rule of Civil Procedure 52 and 26 U.S.C. §§ 7402, 7407, and
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7408. Defendants further represent that they understand and agree that this order
ORDER - 1
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will be entered under Rule 65 and will constitute the final judgment in this matter
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and further agree that they waive any right they may have to appeal from the entry
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of this Order. Defendants further understand that if they violate the Stipulated
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Orders, they may be found to be in contempt of court and may be sanctioned.
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Accordingly, IT IS HEREBY ORDERED:
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1.
The parties’ Stipulated Motion for Entry of Final Judgment and Orders
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of Permanent Injunction, ECF No. 37, is GRANTED pursuant to
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U.S.C. § 7402, 7407 and 7408.
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2.
Jennifer Salgado (individually and doing business under any other
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name or entity) is hereby PERMANENTLY ENJOINED, directly or
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indirectly from:
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A.
Acting as a federal tax return preparer or requesting, assisting
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in, or directing the preparation or filing of federal tax returns for
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any person or entity other than herself or a legal spouse;
B.
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Representing, or assisting in the representation of, any person or
entity, other than herself or a legal spouse, before the IRS;
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C.
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Instructing, advising or assisting others to violate the tax laws
including to evade the payment of taxes;
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D.
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Owning, managing, controlling, working for, investing in,
profiting from, or volunteering for any business or entity
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ORDER - 2
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engaged in tax-return preparation and/or tax advice, or from
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maintaining a professional presence in any premises, whether an
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office, place of business, dwelling, or other location, where tax
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returns are being prepared for a fee or professional tax services
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are being provided, except that, to divest herself from the tax
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return preparation business, Jennifer Salgado may sell Jenny’s
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Tax Services within 180 days, the terms of which sale must be
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approved in writing by the United States Department of Justice
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prior to closing;
E.
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Engaging in any activity subject to penalty under 26 U.S.C.
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§ 6694, such as preparing federal income tax returns that
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understate tax liabilities;
F.
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Engaging in activity subject to penalty under 26 U.S.C. § 6701,
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such as assisting in, procuring, or advising with respect to the
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preparation of any portion of a return, affidavit, claim, or other
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document, when knowing or having reason to believe that the
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relevant portion will be used in connection with a material
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matter arising under the internal revenue laws, and knowing that
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the relevant portion will result in the material understatement of
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another person’s tax liability; and
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G.
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administration and enforcement of the internal revenue laws.
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Engaging in any other conduct that interferes with the
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Jenny’s Tax Services, and its officers, employees, representatives,
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agents and any other person in active concert or participation it, are
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hereby PERMANENTLY ENJOINED, directly or indirectly from:
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A.
Engaging in activity subject to penalty under 26 U.S.C. § 6694,
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such as preparing federal income tax returns that understate tax
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liabilities;
B.
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Engaging in activity subject to penalty under 26 U.S.C. § 6701,
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such as assisting in, procuring, or advising with respect to the
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preparation of any portion of a return, affidavit, claim, or other
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document, when knowing or having reason to believe that the
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relevant portion will be used in connection with a material
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matter arising under the internal revenue laws, and knowing that
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the relevant portion will result in the material understatement of
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another person’s tax liability; and
C.
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administration and enforcement of the internal revenue laws.
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Engaging in any other conduct that interferes with the
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For a period of four years from the date this Injunction is entered,
Jenny’s Tax Services shall hire, at its own expense, a neutral monitor
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ORDER - 4
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(an enrolled agent or certified public accountant), to be selected by
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Jenny’s Tax Services and approved by a representative designated by
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the United States Department of Justice, or by the Court if Jenny’s Tax
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Services and the United States cannot agree, to review its tax return
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preparation work and to provide periodic reports to the United States
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regarding Jenny’s Tax Services’ compliance with this Injunction. The
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neutral monitor shall be an outside person or entity and shall:
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A.
Commence monitoring on the day before Jenny’s Tax Services
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begins preparing or filing federal tax returns for others during
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each tax season and cease monitoring activities no earlier than
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April 15 of each year (the “Annual Monitoring Period”). Jenny’s
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Tax Services is enjoined from operating a tax return preparation
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business without a neutral monitor in place during the Annual
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Monitoring Period;
B.
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Have access to all records, employees, and customers of Jenny’s
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Tax Services, including permission to observe customer
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interviews conducted by Jenny’s Tax Services’ tax return
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preparers;
C.
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Randomly select, inspect, and review a sample of thirty (30)
federal tax returns prepared and signed by Jenny’s Tax Services,
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ORDER - 5
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its independent contractors, or its employees, along with the
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corresponding customer files to ensure substantiation of
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information reported on each return (including substantiation of
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Additional Child Tax Credits, where applicable), and to monitor
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compliance with this Injunction. The neutral monitor will select
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the sample from a list provided by Jenny’s Tax Services, which
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will consist of a complete listing of tax returns prepared and
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signed by Jenny’s Tax Services, its independent contractors, or
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its employees during the Annual Monitoring Period; and
D.
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Provide a written report to the designated representative of the
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United States, within thirty days of completion of the Annual
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Monitoring Period, setting forth in detail the manner and form
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in which Jenny’s Tax Services has or has not complied with the
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terms of this Injunction, including the results of the review of
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tax returns, the identity of any customers whose tax returns fail
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to comply with the terms of this Injunction, and the identity of
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those tax-return preparers who returned those non-compliance
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returns, as well as the amount of fees or other amounts charged
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to each customer, and any other findings.
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5.
The United States may conduce post-judgment discovery, in
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accordance with Federal Rules of Civil Procedure for the purpose of
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monitoring good faith compliance with this Order.
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6.
Approval and entry of this Order resolves only this civil litigation
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action, and neither precludes the United States from pursuing any other
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current or future civil or criminal matters or proceedings, including the
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administrative assessment of any penalties under 26 U.S.C. §§ 6694 or
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6695, nor precludes Defendants from contesting liability in any such
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matter or proceeding.
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7.
and enforcing this Order.
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This Court shall retain jurisdiction for the purpose of implementing
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Each party will bear its respective costs, including any fees or other
expenses of this litigation.
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9.
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IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and
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The Clerk’s Office is directed to CLOSE this file.
provide copies to all counsel.
DATED this 2nd day of October 2017.
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__________________________
SALVADOR MENDOZA, JR.
United States District Judge
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ORDER - 7
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