United States v. Stinson (239 F. Supp. 3d 1299, 2017)

MEMORANDUM OPINION

ANNE C. CONWAY, United State District Judge

Plaintiff the United States (the “Government”) filed this action seeking injunctive relief and disgorgement from Defendant Jason P. Stinson (“Stinson”) for alleged violations of the Internal Revenue Code. (Doc. No. 1). The Court held a preliminary injunction hearing in January 2016. The Court then entered a preliminary injunction against Stinson that enjoined him from preparing tax returns or otherwise operating his tax preparation business. (Doc. 69). On October 17-21, 2016 and November 21, 2016, the Court held a six-day bench trial. Having reviewed the evidence presented at the preliminary injunction hearing and at trial, the Court makes the following findings of fact and conclusions of law. The Court will grant the requested injunctive relief and will order the equitable remedy of disgorgement in the amount outlined below.

I. FINDINGS OF FACT

A. Stinson’s Tax Preparation Business

Stinson began his tax preparation career in 2010 as a manager for LBS Tax Services (“LBS”). (Doc. 10 ¶ 12). In order for Stinson to become the manager of an LBS store, Stinson paid the owner of the LBS franchise, Walner Gachette $5,000. (Doc. 197 at 155). Mr. Gachette covered the store’s expenses while Stinson managed the store and received 25% of the profits. (Id.) In 2011, at some time before the 2012 tax filing season, Stinson became a franchise owner of one LBS store located in Tampa, Florida. (Doc. 32-2 at 1). In 2012, Stinson expanded his franchise to a total of twelve LBS stores. (Id.) Stinson owned the LBS stores by way of Jason Stinson LLC. (Doc. 55-4 at 13-15). Stinson was the sole owner of Jason Stinson, LLC. (Doc. 197 at 158). Stinson hired managers to run each store, primarily individuals who were former tax preparers for Stinson the year before. (Id. at 162-163). Like Stinson had done, Stinson’s managers paid Stinson a fee to become a manager, and in return, Stinson paid the managers a salary that Stinson determined. (Id. at 168).

In 2013, Stinson decided he did not want to do business under the LBS name, so he downsized his operations to ten store locations and started doing business under the name Nation Tax Services (“Nation Tax”). (Doc. 32-3 at 3). Stinson remained in the same physical spaces as his former LBS stores, kept the same employees, and continued to use the same customer files. (Doc. 197 at 166). In 2015, Stinson owned two stores in Tampa, Florida; one store in St. Petersburg, Florida; one store in Birmingham, Alabama; two stores in Raleigh, North Carolina; one store in Greenville, North Carolina; one store in Augusta, Georgia; one store in Fairfield, Alabama; and one store in Albany, Georgia. (Doc. 32-2 at 6-7).

In 2012, Stinson personally prepared hundreds of tax returns. (Doc. 197 at 160-161). However, by 2013, Stinson stopped preparing tax returns and left the tax preparation to his employees. (Id. at 163). Despite ownership of more than ten tax preparation stores, Stinson maintains that he does not believe he had sufficient knowledge to prepare tax returns. (Id. at 164). In total, the Internal Revenue Service (“IRS”) identified over 14,000 tax returns prepared by Stinson’s stores. (Plaintiffs Exhibit 765 (“PL’s Ex.”)).

At all relevant times, Stinson has been the sole owner of the LLC that owns his tax preparation stores, and Stinson determines how the LLC is operated. (Doc. 197 at 160). Even though Stinson changed his LLC name from Jason Stinson LLC to Nation Tax Services LLC, he has owned his tax preparation stores through the same LLC. (Doc. 197 at 159-160). Stinson is the only individual with signature authority on all of Nation Tax Services LLC’s bank accounts. (Id. at 239). All tax preparation fees that were paid to Nation Tax (or LBS when Stinson operated under that name) were deposited into the LLC’s bank accounts. (Id. at 238-239). Although the bank accounts have been in the LLC’s name, Stinson utilizes the accounts for personal and business purposes. (Id. at 240). In addition to owning tax preparation stores, Stinson also owns rental real estate property. (Id. at 152).

According to Stinson, his tax preparation stores target “underprivileged, undereducated poor people” and earned income credit claims. (Doc. 57 at 17; Doc. 197 at 173). Stinson’s customers are “unsophisticated,” according to him, and the customers come to Stinson’s stores because they need assistance with their tax returns. (Doc. 10 ¶ 70; Doc. 197 at 173:20-25). Additionally, Stinson’s business emphasizes marketing and advertising. (Doc. 197 at 175-176). LBS called its advertising efforts “guerilla marketing,”—dropping yard signs, going to residences, and shopping centers to advertise. (Id. at 176). LBS advertised a specific refund per child and a tax refund that taxpayers would receive the same day. (PL’s Ex. 268). The practice at Stinson’s tax preparation stores was to not charge a fee for each tax return upfront, but rather extract the fee from the taxpayer customers’ refund amount. Therefore, a larger refund was better for the client and for Stinson. Stinson often charged in excess of $600 per return, sometimes as much as $999, oftentimes without informing the taxpayer of the fee amount. The goal was to get the maximum refund to make the customer happy and deduct a larger fee. (Doc. 201 at 181— 182,194-195; Doc. 55-9 at 53, 66).

B. Testimony of Stinson’s Taxpayer Customers: Tax Returns That Are False and Fraudulently Prepared

The Government claims that Stinson, by way of LBS and Nation Tax, has repeatedly engaged in the following fraudulent practices: (1) falsifying deductions on Form 1040 Schedule A to reduce a customer’s taxable income by reporting personal expenses as business expenses and falsifying unreimbursed employee expenses and charitable contributions; (2) falsifying Forni 1040 Schedule C deductions by fabricating businesses and reporting profits or losses from a false business or inflating profits and losses from an actual business; (3) claiming false education credits; (4) falsifying a customer’s earned income tax credit; (5) failing to conduct proper due diligence; and (6) failing to disclose fees and provide customers complete copies of their tax returns, (Doc. 218' at 27). To support its claims at trial, the Government presented more than fifteen taxpayer witnesses' who testified that various amounts and claims on their tax returns were false, and that they had not provided the information that the tax return preparer put on the return. Additionally, the Government submitted by deposition- the testimony of forty-one witnesses and their corresponding tax returns,' primarily taxpayer customers, who also testified that they had not provided the false amounts on their tax returns. (Doc. 211). Many of Stinson’s customers have been audited. Additionally, pursuant to Rule 65 of the Federal Rules of Civil Procedure, evidence that was received with the motion for preliminary injunction, that is otherwise admissible, became part of the evidence at trial. (Doc. 195 at 35).

Stinson targeted underprivileged individuals and earned income credit claims (Doc. 57 at 17; - Doc. 197 at 173). The Earned Income Tax Credit (“EITC”) “was enacted to provide relief for low-income families hurt by rising food and energy prices.” United States v. Baxter, 372 F.Supp.2d 1326, 1328 (M.D. Ala. 2005) (citing Sorenson v. Sec. of Treasury of U.S., 475 U.S. 851, 864, 106 S.Ct. 1600, 1609, 89 L.Ed.2d 855 (1986)). The EITC is a refundable tax credit available to low-income workers and depends upon a multitude of factors, such as income, filing status, and number of dependents. (Doc. 69 at 2, n.2). For example, in tax year 2012, customers with earned income between $13,050 and $17,100 were eligible for the maximum EITC. Stinson would falsify information to claim the maximum EITC in a number of ways, or in a combination of these ways: claiming bogus dependents, fabricating unreimbursed employee business expenses and charitable contributions, and fabricating business income or'expenses.

Í. False Deductions on Form Schedule A

A Form Schedule A (Form 1040) (“Schedule A”) is used for itemizing various deductions. (Doc. 198. at 2). Common deductions include home mortgage interest, property taxes, charitable contributions, and unreimbursed employee business expenses. (Doc. 198 at 62). Un-reimbursed employee business expenses “are expenses that aren’t covered by your employer that are required as part of your job.” (Id,) Many of Stinson’s customers’ tax returns reported large employee business expenses with jobs that do not typically have such expenses. (Id.) For example, a bus driver would not have significant unreimbursed mileage expenses because a bus driver rarely, if ever, drives a private car. (Id.) Many tax returns prepared by Stinson or his employees claimed deductions for business- mileage that were actually (and obviously) non-deductible commuting miles. Oftentimes, the amounts claimed on the tax returns included tens of thousands of miles more than the customers actually drove for work. Even after a hired consultant, Hermen Cruz (“Mr. Cruz”), see infra, instructed Stinson’s employees that taxpayers could not claim commuter miles as business mileage, Stinson’s preparers continued to do so.

Additionally, many of the tax returns prepared by Stinson or his employees contained business expenses for meals, entertainment, and uniforms—expenses and amounts that the taxpayers testified were false and that they had not provided to the tax return preparer. Other tax returns claimed personal cell phone expenses as unreimbursed business expenses even though these were clearly not a business expense. In many instances, the individuals’ unreimbursed business expenses made up a large portion, sometimes more than half, of the income they had earned that year. For example, it is illogical for an individual making around $35,000 a year to spend as much as half of their yearly income, around $16,000, on unreimbursed business expenses. (Doc. 55-34 at 22-23 & Doc. 55-36). One of the tax returns claimed employee business expenses of $6,000 more than the taxpayer’s income for that year. (Doc. 211-36 at 32 & PL’s Ex. 26). Many of the tax returns contained false charitable contributions in amounts that the taxpayers testified were not accurate, and that they had not, and would not have, provided to the tax return preparer. On another tax return, Stinson’s employee wrongfully listed taxpayers as having dependents. On another return, the reported mortgage interest paid that year exceeded the mortgage statement.

A number of the tax returns prepared by Stinson or his preparers falsely claimed what is called household help income (“HSH”). HSH is “a very unusual income because it’s reserved for people who work in someone’s home: domestic workers, people who work as maids or nannies.” (Doc. 198 at 59). In tax returns prepared at Stinson’s stores, HSH “was used quite a few times with types of employment you would not expect to see generate the household income. For example, a hair dresser. A hair dresser would not be [HSH].” (Id.) Notably, it is rather uncommon to have HSH income. United States v. Barber, 591 Fed.Appx. 809, 813 (11th Cir. 2014).

Unreimbursed employee business expenses are generally reported in specific line-item detail on an IRS Form 2106, and the total amount of employee business expenses is reported on the “unreimbursed employee expenses” line on the Schedule A. (Doc. 218 at ¶ 108). Many 2014 tax returns prepared in 2015, after Mr. Cruz provided training, claimed unreimbursed employee business expenses on Schedule A but did not have a supporting Form 2106 explaining the basis of the claim.

2. Educational Credits

Another area replete with falsified amounts was education credits. On some tax returns, qualified education expenses were claimed on the tax return, yet the taxpayer testified that he or she did not attend school that year and did not tell the tax preparer otherwise. On other tax returns, the taxpayer had attended school but the amount of qualified education expenses claimed were greater than the taxpayers’ out-of-pocket expenses. Other times, the amount of qualified education expenses claimed on a tax return did not match the official documents that taxpayer customers had provided the preparer. (Doc. 197 at 259, 268-269). Stinson received these documents because he kept them in his customer files. (Id.)

3. Fabricated Business Income and Expenses on Form Schedule C

A Form Schedule C (Form 1040) (“Schedule C”) itemizes various business expenses and is used to list income and expenses related to self-employment, primarily the business losses and gains of a sole proprietor. (Doc. 198 at 60). Reporting income from a business on a Schedule C is one way to increase total income on a tax return. (Id. at 61). A number of the tax returns admitted into evidence listed a “fake business” on a Schedule C form. In other words, the tax return reported losses and profits from a business that the taxpayer testified he or she did not have. (See Doc. 211-4 at 15-16; PL’s Ex. 61) (reporting a “private care” business that the taxpayer did not have and did not report that she had). In addition to tax returns that reported fake businesses, other returns overstated business profits. (Doc. 211-10 at 25-31; Pl.’s Ex. 136) (reporting incorrect profit from cleaning business).

For example, Georgia Gordon’s 2011 and 2012 tax returns reported that she had a business in “home health services,” but Ms. Gordon testified that she did not have a business. (Doc. 195 at 117-118, 122-123; PL’s Exs. 379 & 380). Alberto Bermudez’s tax return reported that he had a personal security business; however, Mr. Bermudez testified that, while he was employed as a security guard, he did not have a security business and did not know it was on his tax return. (Doc. 195 at 285-287; PL’s Ex. 417). One of Stinson’s preparers reported that a taxpayer, Latrecia Burkes, had a hair business; however, Ms. Burkes testified that she never told the preparer that she had a hair business, did not know this was on her tax return, and would not have permitted it on her return had she known. (Doc. 196 at 138-139, 143-146; PL’s Exs. 398 & 399). In contrast, Ms. Burkes testified that the tax preparer asked her who does her daughter’s hair, but that was the extent of their conversation. (Id.)

Stinson’s name appeared on a tax return that falsely reported that Tywana Williamson had a home cleaning service business with a profit of $5,000. (Doc. 197 at 55-57; PL’s Ex. 371). Ms. Williamson testified that both the business and the profit reported were false, and that she would not have told the preparer to report a business she did not have. (Id.) Additionally, Stinson’s tax preparer reported a cleaning service business on Arquetta Montgomery’s tax return. (Doc. 211-27 at 15; PL’s Ex. 44). Ms. Montgomery, however, testified that she did not have a cleaning services business and never did, and that the tax preparer did not ask her if she had one. (Id.) In other instances, the taxpayer had a business, but the profit reported was incorrect. (Doc. 196 at 175) (“I didn’t give them that 6,291. So I mean, it went into my income, I guess, as far as for the business to generate a larger tax return.”).

Additionally, Stinson and his preparers would combine improper Schedule C losses with false deductions listed on a customer’s Schedule A in order to fraudulently lower a customer’s taxable income. (Doc. 218 at 72, ¶ 262). For example, on David Hunter’s 2013 tax return, one of Stinson’s tax preparers reported a non-existent business with more than $12,000 in false losses on the Schedule C and also reported more than $30,000 in false deductions on Schedule A. (Doc. 211-16 at 17 & PL’s Ex. 64) (tax return falsely stated that taxpayer had a moving business). Similarly, on Ms. Montgomery’s 2013 tax return, a Stinson preparer claimed a false business loss of $9,050 on the Schedule C, while also claiming false unreimbursed employee business expenses of $17,873 and improper charitable contributions in the amount of $2,679. (Doc. 211-27 at 15, 24, 25 & Pi’s Ex. 45).

4. Due Diligence Violations

A tax return preparer must make reasonable inquiries to ensure the customer is legitimately entitled to the EITC, document compliance with the due diligence requirements, and keep that documentation for three years. 26 C.F.R. § 1.6995-2. This includes completing the “Paid Preparer’s Earned Income Credit Checklist” (“Form 8867”). (Doc. 218 at 31). The Government presented evidence of a number of due diligence violations.

Stinson’s preparers would check boxes on Form 8867 without actually receiving documentation fr,om customers. (See e.g., Doc. 211-10 at 33 (no medical records) & Ex. 136 (checking box for medical records); Doc. 55-11 at 41; Doc. 55-14 at 11). For example, Stinson’s preparers checked on the Form 8867 that the taxpayers provided medical and school records for their children when they had not. For tax returns claiming Schedule C business profits or losses, Stinson or one of his preparers would check that the taxpayer had provided “receipts or receipt books” on the due diligence Form 8867 when such information had not been provided.

Despite the fact that taxpayers are supposed to receive a complete copy of their tax returns pursuant to 26 U.S.C. §§ 6107 and 6695(a), a number of taxpayer witnesses testified that they did not receive a copy of their tax returns. In other instances, the taxpayer received a copy of their tax return but it was missing pages or forms. One taxpayer had received documents with completely different amounts than were on his actual tax return. (Doc. 211-24 at 37—39). Alarmingly, some taxpayers testified that they signed, blank forms or that they were not shown the page with the amounts written on it. (Doc. 211-30’at 43-46; Doc. 211-39 at 48-49). Stinson’s managers denied that they had provided blank forms. (Doc. 208 at 43-44).

At trial, Stinson called several of his store managers as witnesses. While some of Stinson’s employee witnesses admitted that tax returns were incorrect or did not contain supporting documentation, they denied fault and blamed the taxpayers for providing false information. (Doc. 201 at 262-267, 271-272; Doc. 208 at 103, 112). Stinson did not call a taxpayer witness of his own or present a single accurate tax return prepared by his stores. 'According to Stinson, the taxpayers are not credible or reliable because their tax returns were prepared years ago, and the taxpayers would not admit to their wrongdoing. (Doc. 219 at 63-66, 85, 112). Stinson made a similar argument in opposing the preliminary injunction that the Court rejected because there was “no persuasive reason to discount the sworn testimony of over twenty customers..., [and] the same argument could be made about the reliability of the testimony of Stinson’s tax return preparers.” (Doc. 69 at 5).

The Court finds that the taxpayers’ testimony is credible. First, many of the audits submitted into evidence stated that the Tax Compliance Officer (“TCO”) did not recommend a penalty against the taxpayer because the taxpayer did not show “intentional disregard” for the tax laws. (PL’s Exs. 284, 355,'356, 368, 399). Though Stinson points to a number of audits that did not recommend preparer penalties, there were many audits that did recommend considering a penalty against the preparer. Many of the taxpayers testified that they did not know anything about tax preparation and trusted Stinson’s stores to prepare their tax returns properly. Stin-son’s own witness testified that Stinson’s stores targeted lower income areas where the taxpayers were not aware of what credits are available, yet Stinson argues that these same taxpayers were knowledgeable enough to know how to falsify amounts to increase their tax refund amount. (Doc. 208 at 138). Furthermore, Stinson has not presented evidence showing that the taxpayers knew the amounts were wrong, or that they knew they were submitting tax returns with improper claims. In contrast, the taxpayers testified that they were not aware the amounts were on their returns and did not review them. (See e.g., Doc. 211-3 at 20, 67). Notably, some of Stinson’s preparers made false claims while preparing their own individual tax returns. (Doc. 208 at 62-64 (claiming employee expenses in an amount that was more than half total income); Doc. 56-37 at 141-143; Pl.’s Ex. 192; Doc. 55-38). The Court finds that the taxpayer testimony is probative of fraud on the part of Stinson and his employees.

Due to the filing of improper claims on an immeasurable amount of tax returns, Stinson’s tax preparation stores have caused harm to the United States Treasury and to the taxpayer victims. Notably, many of Stinson’s customers have been audited by the IRS and, consequently, owe money on their modest incomes as a result.

C. How Stinson’s Tax Preparers Were Trained

At trial, Stinson did not admit culpability or show remorse for the harm he has caused his customers. Stinson took the position that, because he provided some training to remedy some of the issues with tax preparation, he should not be held liable. The Court finds it relevant to discuss the training provided by Mr. Gachette to employees of LBS, including Stinson’s employees, and the training that Stinson provided to employees at Nation Tax after he changed the name of his stores. Notably, Stinson owned his tax preparation stores through the same LLC, it just changed names from LBS to Nation Tax. After the name change, Stinson operated stores at the same physical addresses and used the same customer files. Stinson has not shown a material difference in their operations aside from the superficial name of the stores.

Stinson and many of his managers and preparers had no experience preparing tax returns prior to their involvement with LBS and Nation Tax. (Doc. 197 at 153; Doc. 211-6 at 9-10; Doc. 55-40 at 24). At LBS, training was focused on policies, managing employees, and marketing potential customers. (Doc. 10 ¶ 27; Doc. 197 at 154). LBS employees were given scripts to memorize when interviewing customers. (Id; Pl.’s Ex. 186). At LBS, employees, including Stinson, were trained to report commuting miles as business miles, to report money spent on food as deductible meal expenses, and to report cell phone bills as unreimbursed employee business expenses regardless of whether the phone was used for personal or business purposes—all of which are improper. (Doe. 55-2 at 64, 66-67; Doc. 197 at 178-79). From 2010 to 2018, while Stinson was operating under the LBS name, Stinson and his employees attended various trainings. (Doc. 32-2 at 1). This included an instruction sheet that shows pre-determined responses for questions on the tax return without regard to the individual taxpayer’s response or supporting documentation. (PL’s Ex. 186). At one of LBS’s trainings, Stinson met Marlene Guzman (“Ms. Guzman”), who also worked as an LBS tax preparer and manager from 2009-2013. (Doc. 211-12 at 8; Doc. 211-12 at 6-8, 12, 68, 69). While Ms. Guzman did not work at any of Stinson’s stores, she knew Stinson, attended training with Stinson, and communicated with Stinson’s managers. (Id. at 14,15,17,18, 20, 21, 92,136).

Ms. Guzman’s deposition was admitted at trial. (Doc. 211-12). Ms. Guzman testified as to the training she received from LBS. Specifically, that LBS employees were trained to figure out how to decrease or increase a customer’s taxable income to get the taxpayer “more income to get to the amount that you’re needing.” (Id. at 30). LBS called this “maximizing the refund” which meant to “basically let [the customer] know that we’re going to look for more forms to get you more money.” (Doc. 211-12 at 41). LBS also used the term “magic numbers” at one of LBS’s trainings and in a document provided to the tax preparers. (Doc. 211-12 at 41). One of LBS’s documents provides that “magic numbers” is an income range from $16,000 to $18,000, presumably, where the taxpayer would get the largest refund. (PL’s Ex. 456; Doc. 211-12 at 43). The document states that “anything lower than this you try to add income,” and instructs that if anything higher, “to try to take away income.” (PL’s Ex. 456). At the first year of training, LBS employees were instructed to “[j]ust add income.” (Doc. 211-12 at 44) (Q: “Just make up a number?” A: “That’s it.”). By the second year, employees were told to “lure [the customer] in to basically state that they make extra income.” (Id.)

Additionally, LBS employees were trained to ask questions to take away income to hit the “magic range” or get the “perfect number” to make the customer happy. (Doc. 211-12 at 49, 53; Doc. 55-9 at 36; Doc. 211-34 at 81-82). If a customer’s income was lower than $10,000, the goal was to increase their income so they could get more money by adding additional forms, such as a Schedule C. (Id.) The document provided at training even states “input an income of 10000 on schc,” and LBS employees were trained to input a specific Schedule C income depending on the number of children the taxpayer had. (PL’s Ex. 456; Doc. 211-12 at 51). LBS employees also determined what to put on the customer’s tax return for business mileage. (Doc. 211-12 at 55; Doc. 55-9 at 117 (“I was taught to play with those business mileage numbers to get to a number that would help increase his refund.”)). Ms. Guzman did not know at the time that she was being instructed to provide a false number on the return, but looking back with her present knowledge of the tax laws, she believes that LBS trained her to prepare tax returns in a manner that resulted in false information inputted on those returns. (Id. at 163).

Stinson asserts that he spent a lot of money on training his employees. (Doc. 197 at 171). This training did not occur until after Stinson was notified that he was under IRS investigation, and he had met with IRS Agent Ricky Poole. (Id. at 206-208). At that time Stinson contacted Latino Tax to provide a two-day training session for his managers, although Stinson did not attend the entire training nor did he complete any tutorials because, according to him, “I didn’t do taxes. I didn’t need to.” (Id. at 298, 210, 212:21-22; PL’s Ex. 210A). Not until the summer of 2014, after this lawsuit was filed, did Stinson hire Mr. Cruz to provide additional training. (Id. at 213). Mr. Cruz works at H & R Block and. is knowledgeable with regard to tax preparation—he has been preparing taxes for over twenty-five years. (Id. at 213-214). Stinson’s managers, but not Stinson or the tax return preparers, attended Mr. Cruz’s training. (Id. at 220). Mr. Cruz developed a training program based on his review of tax returns prepared at Stinson’s stores. (Doc. 208 at 151-152, 165). Notably, Mr. Cruz did not provide training related to business expenses, Schedule A, Schedule C, or the EITC—the areas where Stin-son’s customers’ tax returns display a pattern of false claims. (Id. at 154-156). Mr. Cruz believed that Stinson’s employees’ knowledge of preparing tax returns was' poor, and they did not understand what qualifies as a business mile for purposes of reporting a business mile deduction. (Id. at 47; Doc. 55-8 at 47). Mr. Cruz did not provide oversight review of any tax returns prepared by Stinson’s employees. (Doc. 197 at 225), Mr. Cruz did inform Stinson’s managers that they cannot claim commuter miles as unreimbursed employment expenses (Doc. ’55-8 at 51:3-53:10); however, the Government admitted into evidence tax returns prepared after this training still claiming improper business mileage. Mr.'Cruz has not been completely reimbursed for his services. (Doc. 208 at 155). '

In December 2014, Stinson had a CPA, Howard McKnight, speak with his managers about not taking every customer that comes in the door. (Doc. 201 at 211). Mr. McKnight made clear that he had not provided any substantive training dr reviewed any tax returns, (Id. at 212, 217, 225-226). Stinson also asked'his managers to attend an IRS tax forum that covers changes in the tax laws from year-to-year. (Doc. 208 at 218). At least by 2013, Stinson required his employees to sign a “due diligence handbook.” (Doc. 208 at 91-91; Defendant’s Exhibit 24A (“Def.’s Ex.”)). Lastly, Drake Software, the tax preparation software that Stinson used at LBS, provided training on the use of their software but did not otherwise provide substantive training. (Doc. 197 at 107,110-112).

Although Stinson provided some unstructured training to his managers, which occurred after the IRS investigation commenced, the Court does not find that this training is sufficient to prevent recurrence of Stinson’s conduct. First, a number of improper practices continued after the training. Second, the training did not cover the areas, discussed above, where there is a pattern of improper claims—Schedule As, Schedule Cs, the EITC, and due diligence. Third, only a small subset of Stin-son’s employees actually received the training—the managers. Fourth, Stinson has not shown remorse or accepted responsibility for the improper preparation of his customers’ tax returns. At trial, Stin-son maintained that he does not need to know how to prepare tax returns despite ownership of a tax preparation business.

D. IRS Investigation of Stinson

The IRS began investigating Stinson in March 2013. (Doc. 200 at 112). The IRS employee assigned to investigate Stinson was Mr. Poole. (Id. at 104). Mr. Poole has twenty-six years of experience working for the IRS and currently investigates tax return preparers and promoters of tax schemes. (Id.) Mr. Poole’s investigations consist of interviewing the target of the investigation and reviewing relevant documents. (Id. at 108-113). Mr. Poole’s investigative duties also include determining whether or not to assess civil penalties or to refer the ease to IRS counsel to determine whether to send a request to the Department of Justice to file a lawsuit. (Id. at 111-112). At the end of each investigation, it is Mr, Poole’s job to determine whether penalties will be assessed. (Id. at 112,124-125).

In the course of his investigation, Mr. Poole interviewed Stinson and two of his store managers. (Id. at 114-117). Mr. Poole selected a sample of twenty tax returns from tax year 2012, prepared in 2013, that contained a Schedule A and a Schedule C. (Id. at 120-121). An IRS list keeper selected additional tax returns and sent the matters out to TCOs to conduct audits. (Id. at 122-123). Thereafter, Mr. Poole compiled a summary spreadsheet of the audits performed on tax returns prepared by Stinson and his stores, a total of two-hundred audits (154 of them from tax year 2012), and Mr. Poole included in the spreadsheet the total tax deficiencies. (Doc. 201 at 32, 152; Pl.’s Ex. 773). According to those audits, adjustments were made in the following areas: Schedule A unreimbursed employee business expenses, Schedule A charitable contributions, Schedule C business income or expenses, and the EITC. (Doc. 200 at 151— 152). Mr. Poole also reviewed additional audits of tax returns prepared in 2010 and 2011 by Stinson’s tax preparation stores. These audits were not commissioned by Mr. Poole, but were tax returns randomly audited by the IRS. (Id. at 134). Mr. Poole found that 95% of these tax returns required an adjustment. (Id at 134). Stinson also identified seventeen audit files—audits also not commissioned by Mr. Poole— that did not include a finding of fraud or recommend tax preparer penalties, but many of these audits still required an adjustment. (Doc. 219 at 62). Mr. Poole testified that he saw the “same pattern of abuse” among the tax returns he reviewed. (Id. at 128).

For tax years 2012-2014, Nation Tax filed 1,965 tax returns containing a Form Schedule A. (Doc. 200 at 170). Of these tax returns, 1,861 reported (the unusual claim for) unreimbursed employee business expenses. (Id.) The average wages reported was $35,040, and the average amount of unreimbursed employee business income was $15,450—that is, the average percentage of customers’ wages reported as an unreimbursed business expense was 44% of their income. (Id.) Additionally, Mr. Poole summarized tax returns filed by Nation Tax in 2012-2014 containing a Schedule G. (Id. at 171-174). During this period, Nation Tax Services filed 5,501 tax returns with a Schedule C attached, and only 137 of these returns claimed a loss, (Id. at 171-173), while 5,364 claimed a profit, (Id.; PL’s Ex. 769).

In February 2016, IRS Agent Holly Shields (“Ms. Shields”), an IRS employee assigned to a group that investigates potentially abusive tax practices, coordinated interviews of a randomly selected sample of Nation Tax customers located in St. Petersburg, Florida and Tampa, Florida for the 2013 tax year. (Doc. 198 at 36-39). Ms. Shields oversaw four IRS revenue agents, including herself, that conducted interviews of twenty-seven randomly selected customers in Tampa, and thirteen customers in St. Petersburg. (Id. at 38-43). These revenue agents performed face-to-face and telephone interviews with the customers. (M at 44-45). The interviews were not audits and were strictly voluntary. (Id. at 46, 66). During the interview, the taxpayer customers were asked whether the information on their tax returns was correct. (Id. at 45, 79-80). At the end of the interviews, the taxpayer customers were asked to sign a declaration stating that the information they had provided was accurate. (Id. at 47). If, based on the interview, the revenue agents determined that the tax return contained a deficiency, Ms. Shields would use an IRS Form 4549 to report and identify the tax deficiency amount. (Id. at 47-48). Of the twenty-seven randomly selected tax returns in Tampa, twenty-one of them, or 77.7%, underre-ported taxes resulting in a tax deficiency of $49,363. (Id. at 55-57; Pl.’s Ex. 478). Of the thirteen tax returns in St. Petersburg, nine of them, or 69.2%, underreported the customers’ tax liability causing a total tax deficiency of $36,573.56. (Doc. 198 at 57; PL’s Ex. 555). In reviewing the sample, Ms. Shields saw improper claims of Schedule C business loss, EITC due diligence violations, and improper claims of Schedule A losses. (Doc. 198 at 59-63).

E. Stinson’s Unjust Enrichment

Stinson contracted with two third-parties to process the tax refunds of his customers—EPS Financial (for 2012-2014) and Refundo (for 2015). EPS Financial and Refundo received the customers’ tax refunds from the IRS, subtracted a processing fee, and then transferred Stinson’s tax preparation fees to a bank account that Stinson controlled. (Doc. 197 at 239-240, 297; Doc. 198 at 10-13). The tax preparer had determined the amount of fees that would be deducted from each tax refund, but the fees could not exceed $999 at EPS Financial, and at Refundo, any fees greater than $1,100 would be flagged. (Doc. 197 at 297; Doc. 198 at 13). The fee amounts deposited into Stinson’s account were tracked through a fee detail report. (Doc. 197 at 299-300; Doc. 198 at 19-20; PL’s Exs. 462 & 463). The gross fees deposited to Stinson’s account from EPS Financial and Refundo are as follows: $483,117 in 2012; $2,432,201 in 2013; $2,375,501 in 2014; and $2,044,311.25 in 2015. (Pl.’s Exs. 462 & 463).

For tax years 2012, 2013, and 2014 (tax returns filed and prepared in 2013, 2014, and 2015 respectively), Stinson’s stores filed 1,965 tax returns with a Schedule A; 1,861 of these returns had a Schedule A that claimed unreimbursed employee business expenses. (PL’s Ex. 767). Stinson received at least $800,101.47 in fees for preparation of these returns. (PL’s Ex. 768). Additionally, for ■ tax year 2011, ■ Stinson was identified áfe the tax return preparer on tax returns including a Schedule A, Schedule C, or that reported education credits where (1) no Form 1098-T was issued by an educational institution for the taxpayer, or taxpayer’s dependent, claiming the education credit, or (2) a Form 1098-T was issued but the grants or scholarships exceeded the qualifying education expenses reported on the Form 1098-T such that the taxpayer or their dependent claimed an education credit when he or she had no out-of-pocket education expenses (PL’s Ex. 204; Doc. 196 at 204-206 & PL’s Ex. 249; Pi’s Ex. 346; Pi’s Ex. 371; PL’s Ex. 399; Doc. 195- at 236 & PL’s Ex. 424). The evidence showed that Stinson and his employees fabricated education expenses on his customers’ tax returns, claimed personal expenses as business expenses on Schedule A and Schedule C, fabricated businesses, fabricated charitable donations, and improperly conducted due diligence. {See id.; see also Doc. 197 at 251-255, 262-263, 282-288; see supra). Stinson received at least $149,851 in fees for the preparation of these tax returns. (PL’s Ex. 771). Combining the tax preparation fees received for tax returns claiming unreim-bursed employee expenses from' tax years 2012, 2013, and 2014 ($800,101.47), with the tax returns that Stinson himself prepared in 2011 containing those forms ($149,851), the Court fihds that Stinson has been unjustly enriched ‘ in the amount of $949,952.

II. CONCLUSIONS OF LAW

A. Preliminary Legal Issues

As an initial matter, the Court rejects Stinson’s argument that the Government is required to prove fraud in order to prevail. The Government brought three claims against Stinson, under three separate provisions of the Internal Revenue Code: 26 U.S.C. § 7407, 26 U.S.C. § 7408, and 26 U.S.C. § 7402, only one of which requires proof of fraud. (Doc. 1). The Court has previously held that the Government is not required to prove fraud and may prevail under any of the three provisions under which it brought its claims. (Doc. 143 at 7).

Additionally, Stinson has repeatedly taken the position that the Government cannot prevail because it has not presented a random sample. The Court rejected this argument in granting the preliminary injunction, and so did the Eleventh Circuit. (Doc. 69; Doc. 168 at 15-16). Stinson has yet to cite case law that requires the Government to submit evidence of a random sample in order to prevail. Last, Stinson maintains that expert testimony is required. Not surprisingly, the Court has already considered and rejected this argument (Doc. 143 at 10, n,6) because Stinson cites no legal authority requiring an expert witness. (See also the Eleventh Circuit’s Opinion on Stinson’s Interlocutory Appeal (Doc. 163 at 16) (“Stinson has failed to provide any authority for his argument that the United States should have presented an expert witness or. submitted only tax returns that had been audited by the IRS to support its claims of Stinson’s improper practices.”).

To the extent Stinson seeks to re-argue issues on which the Court requested briefing during trial (issues that the Court ruled on one day following the close of trial), including objections' to admissibility of evidence and witnesses during trial, his objection to audit files as business records, Rule 26 disclosure violations, and Rule 37 sanctions, the Court will not revisit these issues at this juncture. (See Docs. 184, 193, 203, 204). Stinson had a full and fair opportunity to brief the issues-and did not file a motion for reconsideration. Even had Stinson filed such a motion, he has not met the. high standard warranting reconsideration. See McGuire v. Ryland Grp., Inc., 497 F.Supp.2d 1356, 1368 (M.D. Fla. 2007) (“[a] party who fails to present its strongest case in the first instance generally has no right to raise new theories or arguments in a motion for reconsideration”).

B. Count I—Permanent Injunction Pursuant to 26 U.S.C. § 7407

Section 7407, enacted as part of the Tax Reform Act of 1976, reflects a congressional intent to prevent abuses by tax preparers in the reporting of client’s income tax liabilities. United States v. Ernst & Whinney, 735 F.2d 1296, 1302 (11th Cir. 1984). “In order to issue an injunction pursuant to § 7407, three prerequisites must be met: first, the defendant must be a tax preparer; second, the conduct complained of must fall within one of the four areas of proscribed conduct, § 7407(b)(1); and third, the court must find that an injunction is ‘appropriate to prevent the recurrence’ of the proscribed conduct, § 7407(b)(2).” Id. at 1303. Stinson contends that he is not a tax return preparer. (Doc. 219 at 193-198). This Court has already determined that Stinson is a tax return preparer under 26 U.S.C. § 7701(a)(36). (Doc. No. 143 at 10) (“Stin-son—by virtue of his ownership and operation of tax return preparation stores and his employment of individuals to assist in tax preparation—is a tax return preparer. Stinson owned and operated the tax preparation stores, hired employees, trained employees, and profited from his tax preparation business.”); see also United States v. Mesadieu, 180 F.Supp.3d 1113, 1120 (M.D. Fla. 2016) (Conway, J.). The statutory definition of tax return preparer is broadly written to include those who “employ” others to prepare tax returns. Notably, the extent of Stinson’s violations of the tax laws are even more serious because the way his business operation is structured causes more violations than an individual tax return preparer is capable of. Therefore, the tax laws permit the Court to hold Stinson accountable as a tax return preparer.

Section 7407(b) lists the proscribed conduct to be enjoined. If a tax preparer has engaged in the following activities, in relevant part, then injunctive relief may be appropriate:

(A) engaged in any conduct subject to penalty under section 6694 or 6696, or subject to any criminal penalty provided by this title,...

(C) guaranteed the payment of any tax refund or the allowance of any tax credit; or

(D) engaged in any other fraudulent or deceptive conduct which substantially interferes with the proper administration of the Internal Revenue laws.

26 U.S.C. § 7407(b). The Government need only establish by a preponderance of the evidence that Stinson engaged in conduct subject to penalty under §§ 6694 or 6695. United States v. Ratfield, No. 01-8816-Civ, 2004 WL 3174420, at *23 (S.D. Fla. Nov. 30, 2004).

Pursuant to § 6694, a tax preparer violates the Internal Revenue laws where (1) the return contains an understatement of liability; (2) the understatement is “due to a position for which there was not a realistic possibility of being sustained on its merits”; and (3) the preparer knew or reasonably should have known that the position was either frivolous or not disclosed. 26 U.S.C. § 6694(a). Section 6694(a) is implicated where an individual negligently understates tax liability. Judisch v. United States, 755 F.2d 823, 830 (11th Cir. 1985) (stating that § 6694 addresses negligent understatement of tax liability). In contrast, § 6694(b) imposes penalties on tax preparers who prepare any return or claim for refund in a manner that violates § 6694(a) and does so willfully or recklessly. 26 U.S.C. § 6694(b). “[Willfulness does not require fraudulent intent or an evil motive; it merely requires a conscious act or omission made in the knowledge that a duty is therefore not being met.” United States v. Bailey, 789 F.Supp. 788, 813 (N.D. Tex. 1992) (citing Pickering v. United States, 691 F.2d 853, 855 (8th Cir. 1982)).

A tax return preparer acts willfully “if the preparer disregards, in an attempt wrongfully to reduce the tax liability of the taxpayer, information furnished by the taxpayer or other persons.” United States v. Elsass, 978 F.Supp.2d 901, 918 (S.D. Ohio 2013), aff'd 769 F.3d 390, 398 (6th Cir. 2014)). A tax return preparer “recklessly or intentionally” disregards an IRS rule or regulation “if the preparer takes a position on the return or claim for refund that is contrary to a rule or regulation ... and the preparer knows of, or is reckless in not knowing of, the rule or regulation in question.” Id. A tax return preparer is reckless in not knowing a rule or regulation “if the preparer makes little or no effort to determine whether a rule or regulation exists, under circumstances which demonstrate a substantial deviation from the standard of conduct that a reasonable preparer would observe.” Id.

The Court finds that Stinson has violated both § 6694(a) &. (b) because he has both negligently and willfully prepared tax returns with the same types of false and improper claims that served to wrongfully reduce the taxpayer’s liability. Notably, aside from arguing that he is not a tax return preparer, Stinson does not even address § 6694 in his brief. The Government has presented evidence of numerous tax returns containing an understatement of liability due to completely fabricated expenses, wrongfully claimed dependents or head of household, wrongfully claimed charitable contributions, and fabricated businesses. See United States v. Burgess, No. CV 16-4011, 2017 WL 373493, at *3 (D.N.J. Jan. 24, 2017) (holding § 6694 violated by preparation of tax returns understating customers’ correct tax liabilities by fabricating dependents, Schedule C businesses, expenses, tax credits, and charitable contributions). Falsifying an amount on a tax return is not only “unreasonable,” it is willful conduct. United States v. Franchi, 756 F.Supp. 889, 893 (W.D. Pa. 1991). It is also a willful violation for Stinson to report amounts on tax returns that are different from the amounts provided by the taxpayer. Elsass, 978 F.Supp.2d at 918. Many taxpayers testified that they had not provided the amounts used by the tax preparer, or that they had provided a different amount.

Stinson took “unreasonable” or “reckless” positions in the sense that he would report personal expenses as business expenses, or commuting miles as deductible business miles. It is common knowledge that commuting miles may not be deducted as a business expense. See Steinhort v. C.I.R., 335 F.2d 496, 503 (5th Cir. 1964). Stinson not only claimed non-deductible expenses as deductible opes, but the amounts claimed were largely inflated. Stinson’s conduct was repeated, continuous, and willful, occurring over multiple years and in multiple stores. Stinson knew or should have known that fabricating an amount on a tax return is unreasonable. The pattern of improper claims on tax returns prepared at Stinson’s stores goes far beyond mere mistakes—the “mistakes”' were “unvaryingly in the taxpayers’ favor” and the exact same abusive claims were repeated among taxpayer customers. United States v. Bailey, 789 F.Supp. 788, 818 (N.D. Tex. 1992). Though the Court finds that Stinson’s conduct was willful, at the very least, it constituted an “unrealistic position” in violation of § 6694.

Section 6695 of the Internal Revenue Code penalizes a tax preparer who fails to; furnish a copy of the tax return to the taxpayer; to sign a tax return; to furnish an identifying number that would secure the tax preparer’s proper identification; to retain a copy or list of the tax return pursuant to § 6107(b); or claim the EITC without complying with the statutory due diligence requirements. 26 U.S.C. § 6695(a)—(d), (g). Notably, in holding himself out as an experienced tax preparer, Stinson ig presumed to be familiar with the Internal Revenue laws, regulations, and case law. United States v. Venie, 691 F.Supp. 834, 839 (M.D. Pa. 1988).

Although he was aware of the Government’s .claims, Stinson failed to address § 6695. (Doc. 219 at 193-198). To prevail under § 7407, it is 'sufficient that the Government demonstrate conduct referred to in I.R.C. § 7407(b). The Government has proffered numerous examples of due diligence violations by Stinson and his employees. First, it is inherently impossible to conduct proper due diligence while fabricating claims and amounts on a tax return. Due diligence requires the tax return preparer to make “reasonable inquiries” to ensure a taxpayer’s entitlement to the EITC. 26 C.F.R. § 1.6995-2. Putting a fake amount on a taxpayer’s tax return is not due diligence. Additionally, Stinson improperly completed the due diligence checklist, Form 8867, by checking boxes that the taxpayer had provided supporting documentation when the taxpayers had not provided such documentation. In addition, many taxpayers did not receive complete copies of their tax returns, making it less likely that the taxpayer would have any idea that the false amounts appeared on the tax return. ' '

The Court also finds that Stinson engaged in “other fraudulent or deceptive conduct” because the goal of his business model was to essentially take advantage of low-income taxpayers. Stinson lured customers into his store with the promise of maximum refunds, and—contrived—maximum refunds he delivered. Many of his taxpayer customers received large refunds, which enabled him to deduct a higher fee. Stinson’s customers testified that they trusted him to prepare their taxes correctly, and that they sought his services because they did not know how to prepare taxes. Stinson took advantage of his customers’ general lack of any tax law knowledge, and their deference to his superior abilities such that they chose not to read-through their tax returns. Stinson relied on his customers practice to simply sign their tax returns without reading them.

Once the Government establishes any of the violations enumerated in § 7407, it need only demonstrate that “injunctive relief is appropriate to prevent recurrence of, such conduct.” § 7407(b)(2); United States v. Stinson, 661 Fed.Appx. 946, 949 (11th Cir. 2016). Notably, if the court finds that a tax preparer “continually or repeatedly” engaged in any of the abovemen-tioned conduct and that a narrower injunction would, not be sufficient to prevent future interference with the Internal Revenue laws, the court may enjoin that person from acting as an income tax return preparer. Ernst & Whinney, 735 F.2d at 1302-03.

The Court may consider the following factors for determining whether a defendant is likely to violate the law again:

(1) the gravity of the harm caused by the offense; (2) the extent of the defendant’s participation; (3) the defendant’s degree of scienter; (4) the isolated or recurrent nature of the infraction; (5) the defendant’s recognition (or non-recognition) of his own culpability; and (6) the likelihood that defendant’s occupation would place him in a position where future violations could be anticipated

United States v. Estate Pres. Servs., 202 F.3d 1093, 1106 (9th Cir. 2000); United States v. Kaun, 827 F.2d 1144, 1149-60 (7th Cir. 1987) (considering the factors for entry of an injunction pursuant to §§ 7402(a) and 7408); United States v. Miner, No, 6:10-cv-1873-Orl-41DAB, 2014 WL 7361829, at *8 (M.D. Fla. Nov. 19, 2014) (citing factors that are almost identical to the Seventh Circuit factors in determining the appropriateness of a permanent injunction under §§ 7402 & 7408); United States v. Bosset, No. 8:01-cv-2154-T-17TBM, 2003 WL 1735481, at *3 (M.D. Fla. Feb. 27, 2003) (granting permanent injunction for violations of I.R.C. §§ 6700, 6701, 6694, 6695). Stinson has not discussed these factors in his brief and none of the factors fall in his favor.,

1. Gravity of Harm

This factor strongly favors the Government. Stinson’s conduct spanned multiple years and occurred at multiple store locations. The. sheer number of tax returns prepared by Stinson’s stores—-over 14,-000—is cause for concern. More importantly, Stinson targeted low-income taxpayers and took advantage of their lack of tax knowledge and the attractiveness of getting a high tax refund. Stinson caused great harm to his low-income customers who have been audited and now owe relatively significant sums to the IRS. Stin-son’s conduct also drains administrative resources as the Government has needed to audit many tax returns .and investigate Stinson’s stores. United States v. Preiss, No. 1:07-cv-00589, 2008 WL 2413895, at *5 (M.D.N.C June 11, 2008). Stinson’s scheme additionally caused significant harm to the United States Treasury and the public by interfering with the proper administration of the Internal Revenue laws.

2. Extent of Stinson’s Participation and Stinson’s Degree of Scienter

These factors also favor the Government. Stinson was the sole owner of the LLC that owned and operated multiple tax preparation stores which were improperly preparing tax returns in a manner that is striking—an obvious and continuous pattern of reporting Improper amounts for the same types of claims. Stinson either knew or should have known that his employees were improperly preparing tax returns given the pattern of false claims made on numerous tax returns. Stinson utilized scripts with predetermined responses and there is evidence that LBS instructed its .employees to reach a “magic number.” Ultimately, as the. owner of the stores, Stinson is responsible. If he did not instruct his preparers to wrongfully claim these amounts on their customers’ returns, he played an integral role by failing to oversee his own employees and correcting this practice.

3. The Isolated or Recurrent Nature of the Infraction, Stinson’s Recognition (or Non-Recognition) of His Own Culpability, and Likelihood of Future Violations

These factors also favor the Government. Based on the duration of the scheme and the large number of returns that Stin-son has prepared, this is not an isolated event. But more telling is that Stinson has not recognized his own culpability nor provided sincere assurances that such conduct will not persist. At trial, Stinson showed remorse only that his operation had been halted, he had lost a lot of friends, had been called a crook and a fraud, and had been forced to borrow money from his family. (Doc. 208 at 207-208). Not once has Stinson recognized the harm he caused his customers.

Based on the totality of the circumstances, and considering that all of these factors favor the Government, the Court determines that an injunction under § 7407 preventing Stinson from acting as an income tax return preparer is appropriate and necessary to prevent future interference with the Internal Revenue laws. See United States v. Hall, No. 12-893-cv-W-GAF, 2013 WL 6989540, at *8 (W.D. Mo. Sept. 24, 2013) (stating that because defendant’s conduct “encompassed a broad range of false claims and deductions—such as, false charitable deductions, Schedule C’s and unreimbursed business expenses— a narrow injunction would not appropriately deter”).

C. Count II—Permanent Injunction Pursuant to 26 U.S.C. § 7408

Pursuant to § 7408, a court may enjoin an individual from engaging in conduct subject to a penalty under 26 U.S.C. §§ 6700 or 6701, if a court determines that the individual has engaged in the proscribed conduct and “injunctive relief is appropriate to prevent recurrence” of the conduct. The Government contends that Stinson is subject to penalty under § 6701. (Doc. No. 1 ¶¶ 147-151). Section 6701 imposes a penalty upon any person who:

(1) aids or assists in, procures, or advises with respect to, the preparation.. .of any portion of a return...,

(2)... knows (or has reason to believe) that such portion will be used in connection with any material matter arising under the internal revenue laws, and

(3)... knows that such portion (if so used) would result in an understatement of liability for tax of another person.

26 U.S.C. § 6701.

The term “procures” as used in § 6701 includes “ordering (or otherwise causing) a subordinate to do an act,” as well as “knowing of, and not attempting to prevent, participation by a subordinate in an act.” Id. “If a particular statement has a substantial impact on the decision-making process or produces a substantial tax benefit to a taxpayer, the matter is properly regarded as ‘material.’ ” United States v. Schiff, 269 F.Supp.2d 1262, 1271 (D. Nev. 2003), order clarified, No. cv-S-03-0281-LDG(RJJ), 2003 WL 25780163 (D. Nev. June 20, 2003), and aff'd, 379 F.3d 621 (9th Cir. 2004). Similar to § 7407, in addition to meeting the requirements of a violation of § 6701, the Government must establish that an injunction is necessary to prevent the recurrence of the conduct. United States v. Pugh, 717 F.Supp.2d 271, 297 (E.D.N.Y. 2010).

In United States v. Carlson, the Eleventh Circuit Court of Appeals held that § 6701 requires proof of fraud, and that the Government must prove a violation of § 6701 by clear and convincing evidence. 754 F.3d 1223, 1226-27 (11th Cir. 2014). The Court further reasoned that an inaccurate tax return standing alone is not sufficient circumstantial evidence to prove fraud because a mere inaccuracy in a return does not suggest that the tax return preparer knew that the returns understated the correct tax. Id. at 1230.

Stinson contends that the Government’s evidence is insufficient to prevail under § 6701. (Doc. 219 at 180). This is not the first time this Court has heard this argument. In denying Stinson’s motion for summary judgment, pursuant to Carlson, the Court held:

The present case differs from Carlson in two important respects. First, this is not a case addressing tax preparer penalties for a violation of § 6701. Rather, the Government seeks injunctive relief, pursuant to three separate provisions of the Internal Revenue Code, each of which independently provide for injunctive relief ... Second, the Government has not relied on inaccurate tax returns standing alone, but has provided other circumstantial evidence of Stinson’s wrongdoing.

(Doc. 143 at 8).

In considering Stinson’s interlocutory appeal, an Eleventh Circuit panel also rejected Stinson’s argument. (Doc. 163 at 14) (stating that “Stinson’s contention misapprehends the holding in Carlson and its application to the evidence in this case.”). The Government’s' evidence in this case, including taxpayer and preparer testimony, is more compelling than the evidence presented in Carlson. (Id.) The Government has presented circumstantial evidence, beyond mere inaccuracies in tax returns, sufficient to show that Stinson and his tax return preparers knowingly and deliberately stated inaccurate amounts on tax returns in order to maximize his customers’ tax refunds.

Stinson violated § 6701 by filing tax returns on behalf of taxpayer customers that claimed improper Schedule A deductions (including improper unreimbursed employee expenses and fake charitable contributions), inflated and sometimes completely fabricated Schedule C business expenses, and inaccurately calculated eligibility for the EITC. “Badges of fraud” are abundant: the “mistakes” or improper claims occur repeatedly in the same categories spanning multiple years and multiple states; the mistakes were almost always in the taxpayers’ favor; the IRS determined adjustments were required in those same categories; only 137 of the Schedule C businesses reported on returns prepared at Stinson’s store reported a loss while 5,364 claimed a profit; many of Stinson’s customers reported unreimbursed employee business expenses amounting to almost half of their annual income; there is a pattern of due diligence violations; many of the claims on tax returns contradicted documents or information provided by the taxpayer; and the taxpayers had no idea these claims were on their return.

Stinson’s taxpayer customers received substantial refunds arising from these improper deductions. These false deductions relate to a “material matter” because the taxpayers’ tax liability was “directly affected,” and their tax refunds substantially increased, by claiming these deductions. See Elsass, 978 F.Supp.2d at 937. “Statements regarding the availability of credits, deductions, or other means for reducing tax liability are material.” United States v. Hansen, No. 05-cv-0921-L (CAB), 2006 WL 4075446, at *10 (C.D. Cal. Dec. 13, 2006). Stinson has not provided evidence or authority suggesting that these amounts are not material.

It is well-established that commuter business miles are a non-deductible expense; that persona