United States v. Sang

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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:

UNITED STATES OF AMERICA, :

:

Plaintiff, :

: MEMORANDUM AND ORDER

-against- : GRANTING PRELIMINARY

: INJUNCTION

KEITH SANG, et al, :

: No. 21-cv-4266 (KAM)(CLP)

Defendants. x

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MATSUMOTO, United States District Judge:

On July 21, 2021, Plaintiff United States of America

(“Plaintiff”) filed this action against Defendants Keith Sang,

Kashana Sang, Tareek Lewis, Kimberly Brown, and K&L Accounting,

Inc. a/k/a K&L Accounting Group, Inc.1 (together, “Defendants”).

(ECF No. 1, Complaint (“Compl.”).) Plaintiff alleges that

Defendants, while acting as paid federal tax return preparers,

understated their customers’ tax liabilities by, inter alia,

claiming false filing statuses or false or exaggerated deductions.

(Id. ¶¶ 25‒41.) Plaintiff seeks to permanently enjoin Defendants,

and anyone in active concert or participation with them, from acting

as federal tax return preparers. (Id. at 22‒25.)

1 The Court notes that the parties use both “K&L Accounting, Inc.” and

“K&L Accounting Group, Inc.” to refer to the Defendant entity. (See, e.g.,

ECF No. 34-1, Declaration of Anupama Gupta (“Gupta Decl.”), ¶¶ 2, 8.)

Before the Court is Plaintiff’s motion to preliminarily

enjoin Defendants from acting as tax return preparers until the

resolution of this case. (ECF No. 33, Notice of Plaintiff’s

Motion.) On January 28, 2022, counsel for Defendant Keith Sang

filed a letter informing the Court that Mr. Sang does not oppose

Plaintiff’s motion. (ECF No. 29.) Counsel for Defendants Kashana

Sang, Tareek Lewis, and K&L Accounting, Inc. a/k/a K&L Accounting

Group, Inc. (“K&L Accounting”) also filed a letter on January 28,

which stated that Ms. Sang, Mr. Lewis, and K&L Accounting do not

oppose Plaintiff’s motion. (ECF No. 30.) Defendant Kimberly Brown

filed a memorandum of law in opposition to Plaintiff’s motion on

January 28, and attached her declaration as an exhibit. (ECF Nos.

31, Defendant Brown’s Memorandum of Law in Opposition to

Plaintiff’s Motion for Preliminary Injunction (“Def. Mem.”); 31-1,

Declaration of Kimberly Brown (“Brown Decl.”).)

On February 4, 2022, Plaintiff filed a memorandum of law

in support of its motion for preliminary injunction, attaching

nineteen exhibits. (ECF Nos. 34, Plaintiff’s Memorandum of Law in

Support of Motion for Preliminary Injunction (“Pl. Mem.”); 34-1‒

34-19, Exhibits 1‒19.) Exhibit 1 is a declaration of Revenue Agent

Anupama Gupta, who has been investigating Defendants’ tax

preparation practices since April 2018. (Gupta Decl. ¶ 2.)

Exhibits 4 to 19 include declarations and filed tax returns of some

of Defendants’ customers. (ECF No. 34-4‒34-19, Exhibits 4‒19.)

Plaintiff also filed a reply memorandum in support of its motion

and attached a supplemental declaration of Agent Gupta. (ECF Nos.

35, Plaintiff’s Reply in Support of Motion for Preliminary

Injunction (“Pl. Reply”); 35-1, Exhibit 20, Supplemental

Declaration of Anupama Gupta (“Gupta Suppl. Decl.”).)

On February 10, 2022, the Court heard oral argument on

Plaintiff’s motion for preliminary injunction, with parties

participating by video conference. (Minute Entry dated February

11, 2022.) The Court granted Defendant Brown leave to file

supplemental briefing and gave Plaintiff an opportunity to respond.

(Id.) On February 11, Defendant Brown filed a supplemental letter

memorandum in further support of her opposition to Plaintiff’s

motion, and Plaintiff filed a response on February 14, 2022,

attaching two additional exhibits. (ECF Nos. 36, Defendant Brown’s

Supplemental Letter Memorandum (“Def. Suppl. Mem.”); No. 37,

Plaintiff’s Response to Defendant Brown’s Supplemental Letter

Memorandum (“Pl. Resp.”); Nos. 37-1‒37-2, Exhibits 21‒22.)

For the reasons set forth below, Plaintiff’s motion for

a preliminary injunction is GRANTED as to all Defendants, and

Defendants will be preliminarily enjoined until the resolution of

this action pursuant to 26 U.S.C. §§ 7407 and 7402, in accordance

with the terms set forth below.

FACTUAL FINDINGS

Having considered the materials in the record, the Court

makes the following factual findings.

Plaintiff filed this action after a four-year

investigation by the IRS that began around April 2017. (Gupta

Decl. ¶ 2.) Defendant Keith Sang has been acting as a tax return

preparer since 2000, and his daughter, Defendant Kashana Sang, has

worked with him since at least 2008. (Id. ¶¶ 8, 10.) Defendant

Lewis is Mr. Sang’s nephew and has worked with Mr. Sang since

approximately 2013, and Defendant Brown has worked with Mr. Sang

since 2013. (Id. ¶¶ 11‒12.) During the relevant period, Defendants

have prepared tax returns under several corporate names: Allied

Business Services, Sang’s Accounting and Tax Service, Sang’s Income

Tax Service, and most recently, K&L Accounting, one of the

Defendants in this action. (Id. ¶ 8.) Defendants have prepared

tax returns in the basement of Mr. Sang’s home at 220 East 89th

Street, Brooklyn, New York. (Id.)

Defendant Keith Sang’s Electronic Filing Identification

Number (“EFIN”)2 ending in 5157 was suspended by the IRS in January

2010. (Id. ¶ 15.) In December 2010, Defendant Kashana Sang applied

2 An EFIN is “a unique numerical identifier assigned by the IRS that a tax

preparation firm uses to transmit returns to the IRS on behalf of customers.”

(Gupta Decl. ¶ 14.) According to Exhibit 1-A, May 23, 2017 Letter from the IRS

to Defendant Keith Sang, the EFIN ending in 5157 was applied for and obtained

by Mr. Sang, doing business as Allied Business Services. (ECF No. 34-1, Exhibit

1-A.)

for and obtained a new EFIN, ending in 1954, in her own name, doing

business as Sang’s Accounting and Tax Service at 220 East 89th

Street, Brooklyn, New York. (Id. ¶ 16; ECF No. 34-1, Exhibit 1-

C.) In July 2015, Defendant Kashana Sang registered Sang’s Income

Tax Service with the Department of State, using the same 220 East

89th Street address. (ECF No. 34-3, Exhibit 3.) On May 23, 2017,

Defendant Kashana Sang’s EFIN ending in 1954 was suspended by the

IRS. (ECF No. 34-1, Exhibit 1-B.) Then, in November 2017,

Defendants Lewis and Brown, under the business name K&L Accounting,

applied for a new EFIN, ending in 4645.3 (Gupta Decl. ¶¶ 20, 22.)

Defendants, using the EFINs that were issued to their

various corporate entities, electronically filed approximately

11,290 returns for the 2015 to 2019 preparer years (for the 2014

to 2018 tax years). (Id. ¶ 26). For the 2015, 2016, and 2017

preparer years, approximately 2,399, 2466, and 2,640 returns were

filed, respectively, using Defendant Kashana Sang’s EFIN ending in

1954. (Id. ¶¶ 17‒18.) The new EFIN ending in 4645, applied for

and obtained by Defendants Lewis and Brown, was effective as of

March 2018 and was used to file approximately 1,311 returns during

the 2018 preparer year and approximately 2,474 returns during the

2019 preparer year. (Id. ¶ 22.) Notably, the 11,290 returns filed

during the 2015 to 2019 preparer years only account for returns

3 K&L Accounting’s EFIN application states that its business address is 756

Pine Street, Brooklyn, NY 11208, (Exhibit 1-C), which is Defendant Lewis’s home

address. (Gupta Decl. ¶ 21.)

that were filed electronically and do not include returns that were

prepared by Defendants and paper filed without a preparer signature

or identification number. The IRS audited 119 returns filed by

Defendants during the 2016, 2017, and 2018 preparer years (for the

2015, 2016, and 2017 tax years), which showed that the IRS had

refunded a total of $553,783 to which the taxpayers were not

entitled, with an average deficiency of $4,654 per audited return.

(Id. ¶ 29.)

In support of its motion, Plaintiff submitted as exhibits

a small sample of tax returns prepared and filed by each of the

Defendants. (ECF No. 34-4‒34-19, Exhibits 4‒19.) Some, but not

all, of these exhibits also included declarations of customers

regarding their tax returns.

Maurice and Marcia Sedacey’s 2016 and 2017 Tax Returns

Maurice and Marcia Sedacey filed their 2016 tax return

jointly as a married couple. (ECF No. 34-9, Exhibit 9.) In 2016,

Mr. Sedacey earned $51,514 working as a doorman and Mrs. Sedacey

was retired. (Id. at 17, 19.) Their 2016 return claimed deductions

for $9,091 in unreimbursed employee business expenses and $5,333

in charitable donations. (Id. at 20, 22.) Although the return,

on its face, identifies Defendant Kashana Sang as the preparer by

her name and unique Preparer Tax Identification Number (“PTIN”)4,

4 Unlike EFINs, which are issued to tax preparation firms, “the IRS issues

preparer tax identification numbers (‘PTINs’) to tax return preparers to show

which individual preparer is responsible preparing any particular return.

(id. at 19), Mrs. Sedacy stated in a declaration that it was

Defendant Keith Sang who prepared their tax returns and that she

and her husband did not ask Mr. Sang to claim $9,091 in business

expenses and $5,333 in charitable donations. (Id. at 1.)

Additionally, though Mrs. Sedacey stated that Defendant Keith Sang

prepared her and her husband’s tax returns, their 2017 return was

paper filed with no preparer signature or identification number.

(Id. at 1, 6.)

Robert Purcell’s 2016 and 2017 Tax Returns

Robert Purcell earned $33,728 in 2016 working as a cargo

agent. (ECF No. 34-18, Exhibit 18, at 23, 25.) His 2016 return

claimed $6,796 in unreimbursed employee business expenses and

$3,285 in charitable donations. (Id. at 26, 33.) Mr. Purcell

stated in a declaration: “I didn’t have any expenses relating to

my job, nor did I tell the preparer to put this figure on my return.

I only donate around $200 a year to charity [and] didn’t tell the

return preparer.” (Id. at 1.) Page 25 of the return states that

it was prepared by Defendant Kashana Sang at Sang’s Income Tax

Service and lists Ms. Sang’s PTIN and the same 220 East 89th Street

address in Brooklyn where Defendants have conducted their tax

preparation business. (Id. at 25.)

Multiple PTIN holders may file returns under the same EFIN.” (Gupta Suppl.

Decl. ¶ 2.)

In 2017, Mr. Purcell earned $30,768 working as a cargo

agent. (Id. at 5, 7.) The 2017 return claimed $6,753 in

unreimbursed employee business expenses and $3,725 in charitable

donations. (Id. at 8, 16.) Mr. Purcell, as stated before, said

in a declaration that the claimed expenses and charitable donations

are not accurate and that he never asked the preparer to include

those numbers in his 2016 and 2017 tax returns. (Id. at 1.) Page

7 of the return identifies Defendant Lewis at K&L Accounting as the

preparer and lists Mr. Lewis’ PTIN. (Id. at 7.)

Jason Savage’s 2016 and 2017 Tax Returns

Jason Savage’s 2016 tax return lists Defendant Kashana

Sang as the preparer and his 2017 tax return lists Defendant Lewis

as the preparer, but Mr. Savage stated in a declaration that it was

Defendant Keith Sang, whose own EFIN was suspended by the IRS in

January 2010, who has prepared his tax returns since he started

working. (ECF No. 34-5, Exhibit 5, at 1, 9, 24.)

Patrick Atkinson’s 2016 and 2017 Tax Returns

Patrick Atkinson earned $37,288 in 2016 working as a

computer technician. (ECF No. 34-7, Exhibit 7, at 24, 27.) His

2016 return claimed $3,812 in unreimbursed employee business

expenses and $3,000 in childcare expenses. (Id. at 28‒29.) Page

27 states that it was prepared by Defendant Kashana Sang at Sang’s

Income Tax Service at the same 220 East 89th Street address in

Brooklyn. (Id. at 27.) In 2017, Mr. Atkinson earned $49,921

working as a computer technician. (Id. at 6, 9.) His 2017 return

claimed $4,153 in unreimbursed employee business expenses and

$3,000 in childcare expenses. (Id. at 10‒11.) Page 9 states that

it was prepared by Defendant Brown at K&L Accounting and lists a

PO box under address. (Id. at 9.) Mr. Atkinson stated in a

declaration that Defendant Keith Sang prepared his 2016 and 2017

tax returns at Mr. Sang’s office at 220 East 89th Street in

Brooklyn. (Id. at 1.) Mr. Atkinson further stated that Defendant

Keith Sang “reviewed and finalized the returns” and that he does

“not know about child care [sic] expenses and business expenses on

[his] tax returns” and “did not tell the preparer to deduct those

expenses.” (Id.)

Tashoy Saddler and Everton Morris’ 2016 and 2017 Tax

Returns

Tashoy Saddler and Everton Morris’ 2016 tax returns,

filed separately under different addresses, both claimed head of

household (“HOH”)5 status and listed the same child, D.Y., as the

qualifying child. (ECF No. 34-8, Exhibit 8, at 37, 45.) Mr.

Morris’s return listed D.Y. as a dependent6 and represented that

5 “[A]n individual shall be considered a head of a household if, and only

if, such individual is not married at the close of his taxable year . . . and

either . . . maintains as his home a household which constitutes for more than

one-half of such taxable year the principal place of abode, as a member of such

household, of (i) a qualifying child of the individual . . . or (ii) any other

person who is a dependent of the taxpayer . . . .” 26 U.S.C. § 2(b).

6 26 U.S.C. § 152(a) states that the term “dependent” means a qualifying

child or a qualifying relative, and section 152(c) defines “qualifying child”

as an individual who, among others, “has the same principal place of abode as

the taxpayer for more than one-half of such taxable year.” 26 U.S.C. §§ 152(a),

D.Y. lived with Mr. Morris for 12 months in 2016. (Id. at 45, 55.)

Both tax returns were prepared by Defendant Kashana Sang from Sang’s

Income Tax Service at the same 220 East 89th Street address in

Brooklyn. (Id. at 40, 48.)

Likewise, Tashoy Saddler and Everton Morris’ 2017 tax

returns, filed separately under different addresses, both claimed

HOH status and listed the same child, D.Y., as the qualifying child.

(Id. at 5, 16.) Mr. Morris’s return listed D.Y. as a dependent and

stated that D.Y. lived with Mr. Morris for 12 months in 2017. (Id.

at 16, 33.) Page 19 states that Mr. Morris’ 2017 tax return was

prepared by Defendant Brown at K&L Accounting. (Id. at 19.) Ms.

Saddler’s 2017 tax return was paper filed without preparer

signature or identification number, but Ms. Saddler stated in a

declaration that her 2016 and 2017 tax returns were prepared by

Sang’s Income Tax Service at 220 East 89th Street in Brooklyn.

(Id. at 1, 6.) Plaintiff submitted Exhibit 1-C, which includes an

EFIN application filed by Defendant Kashana Sang on behalf of Sang’s

Income Tax Service as its President. (Exhibit 1-C.)

Jhamel Clarke’s 2016 Tax Return

Jhamel Clarke’s 2016 tax return claimed HOH status and

listed K.C. as the qualifying child. (ECF No. 34-11, Exhibit 11,

at 14.) Additionally, the 2016 return claimed $4,343 in charitable

(c).

donations. (Id. at 18.) Mr. Clarke stated in a declaration that

he does not know K.C. and that he does not “know about the charity

figure reported.” (Id. at 1.) Although page 16 of the return

states that it was prepared by non-party Venelda Wallace, Sang’s

Income Tax Service is listed as the preparer firm, along with its

employer identification number (“EIN”) ending in 9109. (Id. at

16.) Plaintiff submitted Exhibit 1-C, which includes an EFIN

application filed by Defendant Kashana Sang as the President of

Sang’s Income Tax Service that lists the same EIN ending in 9109.

(Exhibit 1-C.)

Roland Edwin’s 2016 Tax Return

Roland Edwin’s 2016 tax return claimed $6,000 in

childcare expenses paid to a Corine McLean. (ECF No. 34-17, Exhibit

17, at 31.) In a declaration, Mr. Edwin stated, “I do not know who

Corrine McLean is and did not pay her to take care of my children,”

and that he did not provide the return preparer with information

for this deduction. (Id. at 1.) Although page 29 of the return

lists the preparer as non-party Venelda Wallace, the preparer firm

listed, like in Mr. Clarke’s 2016 tax return, is Sang’s Income Tax

Service, along with its EIN ending in 9109. (Id. at 29.) Again,

when applying for an EFIN on behalf of Sang’s Income Tax Service,

Defendant Kashana Sang submitted that she was the President of

Sang’s Income Tax Service. (Exhibit 1-C.)

Roland Edwin’s 2017 tax return also claimed $6,000 in

childcare expenses paid to Corine McLean. (Exhibit 17 at 14.) As

stated above, Mr. Edwin denied knowing Corine McLean, paying her

to care for his children, or providing the return preparer the

information for this deduction. (Id. at 1.) Page 6 of Exhibit 17

states that Mr. Edwin’s 2017 return was prepared by Defendant Brown

at K&L Accounting. (Id. at 6.)

Romaine Benloss’s 2016 Tax Return

Romaine Benloss’s 2016 tax return claimed $8,264 in

unreimbursed employee business expenses and $4,516 in charitable

donations. (ECF No. 34-19, Exhibit 19, at 5‒6.) Mr. Benloss stated

in a declaration that he “did not contribute $4,516 and . . . did

not have $8,264 in job expenses in 2016.” (Id. at 1.) Page 4 of

the return states that it was prepared by Defendant Kashana Sang

at Sang’s Income Tax Service. (Id. at 4.)

Simone Peynado and Colin Peynado’s 2019 Tax Returns

Simone Peynado and Colin Peynado’s 2019 tax returns were

filed separately under different addresses. (ECF Nos. 34-12,

Exhibit 12; No. 34-13, Exhibit 13.) Ms. Peynado’s 2019 tax return

claimed HOH status, listed T.P. as one of her dependents, and stated

that T.P. lived with Ms. Peynado for twelve months in 2019.

(Exhibit 12 at 1, 13.) Mr. Peynado’s 2019 tax return also claimed

HOH status and listed the same child, T.P., as the qualifying child.

(Exhibit 13 at 1.) Both returns were prepared by Defendant Lewis

at K&L Accounting. (Exhibit 12 at 2; Exhibit 13 at 2.)

James and Esther, Shamane, and Sheniesha Amsterdam’s 2019

Tax Returns

James and Esther Amsterdam filed their 2019 tax return

jointly as a married couple. (ECF No. 34-14, Exhibit 14.) Shamane

and Sheniesha Amsterdam each filed a separate tax return for 2019.

(ECF Nos. 34-15, Exhibit 15; 34-16, Exhibit 16.) Shamane and

Sheniesha Amsterdam shared the same address, 1015 Sutter Ave Apt

1FL, Brooklyn, NY 11208, in 2019. (Exhibit 15 at 1; Exhibit 16 at

1.) James and Esther Amsterdam listed the same address in their

return, 1015 Sutter Ave in Brooklyn, but did not indicate the floor

number. James and Esther Amsterdam’s 2019 joint return did not

claim HOH status but listed L.A. as a dependent. (Exhibit 14 at

1.) Shamane and Sheniesha Amsterdam’s 2019 returns each claimed

HOH status and listed the same child, L.A., as the qualifying

person. (Exhibit 15 at 1; Exhibit 16 at 1.) Thus, the same child

was used to claim a deduction on three different returns, and two

people who share the same household, Shamane and Sheniesha

Amsterdam, both claimed HOH status. All three tax returns were

prepared by Defendant Lewis at K&L Accounting. (Exhibit 14 at 2;

Exhibit 15 at 2; Exhibit 16 at 2.)

Lorraine Anderson’s 2017 Tax Return

Lorraine Anderson stated in a declaration that Defendant

Keith Sang, whose EFIN was suspended by the IRS in January 2010,

prepared her 2016 and 2017 tax returns, but her 2017 tax return was

paper filed with no preparer signature or identification number.

(ECF 34-4, Exhibit 4, at 1, 21.)

Winston White’s 2017 Tax Return

Winston White’s 2017 tax return was paper filed, with no

preparer signature or identification number, but he stated in a

declaration that his 2016 and 2017 tax returns were prepared by

“Keith Sang Tax Service.” (ECF No. 34-10, Exhibit 10, at 1, 5.)

Defendant Keith Sang’s EFIN was suspended by the IRS in January

2010. (Gupta Decl. ¶ 15.)

Patricia Enmore’s 2016 Tax Return

Patricia Enmore’s 2016 tax return states that it was

prepared by non-party Venelda Wallace at Sang’s Income Tax Service,

but Ms. Enmore stated in a declaration that “Mr. Keith,” whose own

EFIN was suspended by the IRS in January 2010, (id.), prepared her

2016 and 2017 tax returns. (ECF No. 34-6, Exhibit 6, at 1, 5.)

CONCLUSIONS OF LAW

Plaintiff seeks a preliminary injunction against

Defendants under 26 U.S.C. §§ 7407 and 7402. Because section 7407

sets forth statutory conditions for equitable relief, the Court may

issue a preliminary injunction if those conditions are met, without

engaging in the traditional analysis for injunctive relief. United

States v. Doonan, 19-cv-9578(AT), 2020 WL 1659861, at *2 (S.D.N.Y.

Apr. 3, 2020). Defendant Brown argues in her opposition that the

Court should nonetheless consider equitable factors. (Def. Mem.

at 6.) The Court disagrees because courts in this Circuit have

been clear that where an injunction is expressly authorized by

statute, the courts need to consider only whether the statutory

violations have been shown. See, e.g., United States v. Broccolo,

No. 06-cv-2812(KMK), at *2 (S.D.N.Y. Dec. 13, 2006) (stating that

section 7407 contains “express provisions authorizing district

courts to enter injunctions upon the showing of a violation of the

law,” and, therefore, “if the Government establishes a violation

of [section 7407], the Court may issue a preliminary injunction.”).

I. Injunctive Relief Under 26 U.S.C. § 7407(b)(1)(A)

Under section 7407(b)(1)(A), the Court may enjoin a tax

preparer who has “engaged in any conduct subject to penalty under

section 6694 or 6695,” as discussed below. 26 U.S.C. §

7407(b)(1)(A). Injunctive relief is warranted under section

7407(b)(1)(A) if it is “appropriate to prevent the recurrence of”

the unlawful conduct at issue. Id. § 7407(b)(2). Additionally,

if a tax return preparer has “continually or repeatedly” engaged

in conduct subject to penalty under section 6694 or 6695 and an

injunction prohibiting such conduct would be insufficient to

prevent further interference with the administration of the

internal revenue laws, the Court may enjoin such person from acting

as a tax return preparer. Id.

A. Violations Subject to Penalty Under 26 U.S.C. 6694(a)

First, Plaintiff has shown that Defendants violated

section 6694(a), which subjects a tax return preparer to a penalty

for understatement of taxpayer liability based on an unreasonable

position, where the tax preparer “knew (or reasonably should have

known) of the position.” Id. § 6694(a). The Court considers below

evidence of violations that would be subject to penalty under

section 6694(a) that are specific to each of the Defendants, based

on the record.

1. Keith Sang

The Court finds that Defendant Keith Sang engaged in

violations subject to penalty under section 6694(a) by preparing

tax returns that claimed false deductions that he, at the very

least, should have known did not have any basis in fact and thus

were improper and unreasonable. Examples of tax returns prepared

by Mr. Sang that demonstrate his section 6694(a) violations are:

(1) the 2016 tax return of Maurice and Marcia Sedacey that claimed

$9,091 in unreimbursed employee business expenses and $5,333 in

charitable donations, which were disavowed by Mrs. Sedacy in her

declaration as illegitimate, (Exhibit 9 at 1, 20, 22), and (2) the

2016 and 2017 tax returns of Patrick Atkinson that claimed

unreimbursed employee business and childcare expenses that Mr.

Atkinson “did not tell the preparer to deduct,” (Exhibit 7 at 1,

10‒11, 28‒29).

2. Kashana Sang

Defendant Kashana Sang, whose name and unique PTIN appear

in the Sedaceys’ 2016 return and Mr. Atkinson’s 2016 return, is

also implicated by the understatement of tax liabilities in those

returns. (Exhibit 9 at 19; Exhibit 7 at 27.) Even if it was

Defendant Keith Sang who prepared those returns, Ms. Sang is also

implicated for having allowed her father, whose EFIN was suspended

in 2010 by the IRS, to continue preparing and electronically filing

tax returns using her name, PTIN, and EFIN.

In addition, the Court finds that Ms. Sang herself

engaged in violations subject to penalty under section 6694(a) by

preparing tax returns that claimed false filing statuses and

deductions that she, at the very least, should have known did not

have any factual basis and thus were improper and unreasonable.

For example, Ms. Sang included deductions for unreimbursed employee

business expenses and charitable donations in Robert Purcell’s 2016

tax return, (Exhibit 18 at 26, 33), despite not having received

information from Mr. Purcell that would justify those deductions.

In fact, Mr. Purcell stated in a declaration that he did not have

any expenses related to his job and did not tell the preparer about

his charitable donations. (Id. at 1.) In addition, Ms. Sang

prepared two 2016 tax returns with different addresses that both

claimed HOH status based on the same qualifying child when she, as

a return preparer, should have known that two individuals cannot

both claim HOH status using the same child, as one child could not

have resided at more than one address for over six months in any

given year. (Exhibit 8 at 37, 40, 45, 48, 55.) Finally, Ms. Sang

included deductions for unreimbursed employee business expenses and

charitable donations in Romaine Benloss’s 2016 tax return, (Exhibit

19 at 4‒6), despite not having received information from Mr. Benloss

that would justify such deductions. Mr. Benloss stated in a

declaration that he “did not contribute $4,516 and . . . did not

have $8,264 in job expenses in 2016.” (Id. at 1.)

Other examples that demonstrate Defendant Kashana Sang’s

section 6694(a) violations are tax returns that listed Sang’s

Income Tax Service as the preparer firm and its EIN, thus associated

with Ms. Sang as the President of Sang’s Income Tax Service: (1)

Jhamel Clarke’s 2016 tax return that claimed HOH status based on a

qualifying child that the taxpayer did not know and included

charitable donations that the taxpayer did not report to the

preparer, (Exhibit 11 at 1, 14, 16, and 18), and (2) Roland Edwin’s

2016 tax return that claimed childcare expenses supposedly paid to

an individual that the taxpayer disclaimed knowing or employing to

take care of his children, (Exhibit 17 at 1, 29, 31.)

3. Tareek Lewis

The Court finds that Defendant Lewis also engaged in

violations subject to penalty under section 6694(a) by preparing

tax returns that claimed false deductions that he, at the very

least, should have known did not have any basis in fact and thus

were improper and unreasonable. For example, Robert Purcell

disavowed the unreimbursed employee business expenses and the

charitable donations that were claimed in his 2017 tax return,

which was prepared by Defendant Lewis. (Exhibit 9 at 1, 20, 22).

In addition, Mr. Lewis prepared the 2019 tax returns of Simone and

Colin Peynado, which were filed separately under different

addresses, that both claimed HOH status and listed the same child,

T.P., as the qualifying child. Exhibit 12 at 1; Exhibit 13 at 1).

Ms. Peynado had also represented in her return that T.P. lived with

her for twelve months in 2019. (Exhibit 12 at 13.) The Court

finds that Mr. Lewis, at the very least, should have known that the

same child could not have resided with Ms. Peynado for twelve months

while also residing with Mr. Peynado for over six months in 2019

and, therefore, the two taxpayers could not both claim HOH status.

Finally, Defendant Lewis prepared the 2019 tax returns

of James and Esther Amsterdam (filed jointly as a married couple),

Shamane, and Sheniesha Amsterdam. (Exhibits 14‒16.) There, the

same child was used to claim a deduction on three different returns,

and two people from the same household, Shamane and Sheniesha

Amsterdam, improperly both claimed HOH status. (Exhibit 14 at 1;

Exhibit 15 at 1; Exhibit 16 at 1.)

4. Kimberly Brown

Defendant Brown, whose name and unique PTIN appear in Mr.

Atkinson’s 2017 tax return, is also implicated by the

understatement of his tax liability. (Exhibit 7 at 9.) Even if

it was Defendant Keith Sang who prepared the return, Ms. Brown is

also implicated by having allowed Mr. Sang, whose EFIN was suspended

in 2010, to continue preparing and electronically filing tax

returns using her name, PTIN, and EFIN.

In addition, the Court finds that Ms. Brown herself

engaged in violations subject to penalty under section 6694(a) by

preparing tax returns that claimed false filing statuses and

deductions that she, at the very least, should have known did not

have any factual basis and thus were improper and unreasonable.

For example, Ms. Brown prepared Roland Edwin’s 2017 tax return that

claimed $6,000 in childcare expenses paid to an individual named

Corine McLean. (Exhibit 17 at 6, 14.) However, those expenses

were not claimed based on information provided by the taxpayer, as

Mr. Edwin denied knowing Corine McLean, paying her to care for his

children, or providing the return preparer the information for this

deduction. (Id. at 1.)

Furthermore, Ms. Brown prepared the 2017 tax return of

Everton Morris, which claimed HOH status and listed D.Y. as the

qualifying child, even though D.Y. was also listed as the qualifying

child for Tashoy Saddler’s household in her 2017 tax return.

(Exhibit 8 at 5, 16.) The two returns had different addresses.

(Id.) Although Ms. Saddler’s 2017 tax return was paper filed and

did not include any preparer information, (id. at 6), Ms. Saddler

stated in a declaration that her 2016 and 2017 tax returns were

prepared by Sang’s Income Tax Service. (Id.) Ms. Brown would have

learned had she performed appropriate due diligence that another

individual whose 2017 tax return was prepared by Mr. Sang’s business

also claimed HOH status for the same child listed in Mr. Morris’

tax return as the qualifying child.

5. K&L Accounting

K&L Accounting’s EFIN application, which was submitted

by Plaintiff as Exhibit 1-C, listed Defendants Lewis and Brown as

co-managers of K&L Accounting. (Exhibit 1-C.) Therefore, the

Court finds that Defendant K&L Accounting is implicated by the

aforementioned section 6694(a) violations carried out by Defendants

Lewis and Brown, its co-managers. See United States v. Demauro,

581 F.2d 50, 53 (2d Cir. 1978) (“[A]s a general rule a corporation

is liable for the criminal acts of its employees if done on its

behalf and within the scope of the employees’ authority.”)

(citations omitted).

B. Violations Subject to Penalty Under 26 U.S.C. § 6694(b)

Plaintiff also asserts that Defendants violated section

6694(b), which penalizes a tax return preparer’s “willful attempt

in any manner to understate the liability for tax on the return or

claim, or reckless or intentional disregard of rules and

regulations.” 26 U.S.C. § 6694(b). The Court addresses violations

that would be subject to penalty under section 6694(b) specific to

each of the Defendants, based on the evidence in the record.

1. Keith Sang

Defendant Keith Sang, even after his EFIN ending in 5157

was suspended by the IRS in January 2010, (Gupta Decl. 4), continued

to act as a tax preparer, using EFINs applied for and issued to

Defendants Kashana Sang, Lewis, and Brown, in, at minimum, reckless

disregard of rules and regulations and therefore in violation of

section 6694(b). For example, Jason Savage’s 2016 tax return lists

Defendant Kashana Sang as the preparer and his 2017 tax return

lists Defendant Lewis as the preparer, but Mr. Savage stated in a

declaration that it was Defendant Keith Sang who has prepared his

tax returns since he started working. (Exhibit 5 at 1, 9, 24.)

Other returns prepared by Mr. Sang but filed under the names of his

associates are: (1) Patricia Enmore’s 2016 tax return that

identified non-party Venelda Wallace as the preparer, (Exhibit 6

at 1, 5); (2) Patrick Atkinson’s 2016 and 2017 tax returns, which

identified Defendants Kashana Sang and Brown as the preparers,

respectively, (Exhibit 7 at 1, 9, 27); and (3) Maurice and Marcia

Sedacey’s 2016 tax return, which identified Defendant Kashana Sang

as the preparer, (Exhibit 9 at 19).

Furthermore, the Court finds that Plaintiff has proffered

sufficient examples of violations by Defendant Keith Sang, who

included in the tax returns that he prepared false deductions that

lacked factual basis, in reckless disregard of rules and

regulations. Because these examples were already discussed in the

Court’s section 6694(a) analysis above, the Court simply lists the

relevant ones here for completeness: the 2016 tax return of Maurice

and Marcia Sedacey, and the 2016 and 2017 tax returns of Patrick

Atkinson that claimed false unreimbursed employee business expenses

and charitable donations. (Exhibit 9 at 1, 20, 22; Exhibit 7 at

1, 10‒11, 28‒29).

2. Kashana Sang

Defendant Kashana Sang violated section 6694(b) by

allowing Defendant Keith Sang to continue preparing and

electronically filing tax returns using her name, PTIN, and EFIN,

in, at minimum, reckless disregard of rules and regulations and

thus in violation of section 6694(b), as exemplified by the 2016

tax return of Jason Savage, the 2016 tax return of Patrick Atkinson,

and the 2016 tax return of Maurice and Marcia Sedacey, which all

identified Defendant Kashana Sang as the preparer despite having

been prepared by Defendant Keith Sang. (Exhibit 5 at 1, 24; Exhibit

7 at 1, 9, 27; Exhibit 9 at 1, 19).

Furthermore, the Court finds that Plaintiff has proffered

sufficient examples of violations by Defendant Kashana Sang in

preparing tax returns that claimed deductions and HOH statuses that

were neither accurate nor based on information provided by the

customers, in reckless disregard of rules and regulations and thus

in violation of section 6694(b). Because the relevant examples

were already discussed in detail in the Court’s section 6694(a)

analysis above, the Court, without repeating itself, simply lists

them here for completeness: (1) the 2016 tax return of Robert

Purcell and the 2016 tax return of Romaine Benloss that each claimed

false unreimbursed employee business expenses and charitable

donations, (Exhibit 18 at 1, 26, 33; Exhibit 19 at 1, 4‒6); (2)

Roland Edwin’s 2016 tax return that claimed false childcare

expenses, (Exhibit 17 at 1, 29, 31); (3) Tashoy Saddler and Everton

Morris’ 2016 tax returns, filed separately under different

addresses, that both claimed HOH status using the same qualifying

child; and (4) Jhamel Clarke’s 2016 tax return that claimed HOH

status based on a child that the taxpayer did not even know and

claimed false charitable donations, (Exhibit 11 at 1, 14, 16, and

18).

3. Tareek Lewis

Defendant Lewis violated section 6694(b) by allowing

Defendant Keith Sang to continue preparing and electronically

filing tax returns using his name, PTIN, and EFIN, despite the

suspension of Mr. Sang’s EFIN by the IRS, in, at minimum, reckless

disregard of rules and regulations, as exemplified by the 2017 tax

return of Jason Savage, which identified Defendant Lewis as the

preparer despite having been prepared by Defendant Keith Sang.

(Exhibit 5 at 1, 9.)

Furthermore, the Court finds that Plaintiff has proffered

sufficient examples of violations by Defendant Lewis in preparing

tax returns that claimed deductions and HOH statuses that were

unwarranted, and not based on information provided by the

customers, in reckless disregard of rules and regulations and thus

in violation of section 6694(b). Because these examples were

already discussed in detail in the Court’s section 6694(a) analysis

above, here, the Court simply lists the relevant examples for

completeness: (1) Robert Purcell’s 2017 tax return that claimed

false unreimbursed employee business expenses and charitable

donations, (Exhibit 9 at 1, 20, 22); (2) the 2019 tax returns of

Simone and Colin Peynado, which both claimed HOH status based on

the same qualifying child, (Exhibit 12 at 1‒2, 3; Exhibit 13 at 1‒

2); and (3) the 2019 tax returns of James and Esther, Shamane, and

Sheniesha Amsterdam that all claimed deductions using the same

qualifying child, with James and Esther claiming the child as a

dependent and Shamane and Sheniesha each claiming HOH status,

(Exhibit 14 at 1‒2; Exhibit 15 at 1‒2; Exhibit 16 at 1‒2). In

addition, the 2019 tax returns of Shamane and Sheniesha Amsterdam

each claimed HOH status, despite reporting the same address and,

thus both could not both have been designated as the head of the

same household. (Exhibit 15 at 1; Exhibit 16 at 1.)

4. Kimberly Brown

Defendant Brown violated section 6694(b) by allowing

Defendant Keith Sang to continue preparing and electronically

filing tax returns using her name, PTIN, and EFIN, in, at minimum,

reckless disregard of rules and regulations, as exemplified by the

2017 tax return of Patrick Atkinson, which identified Defendant

Brown as the preparer despite having been prepared by Mr. Sang.

(Exhibit 7 at 1, 9.) In addition, the Court finds that Defendant

Brown violated section 6694(b) by claiming deductions for childcare

expenses in Roland Edwin’s 2017 tax return, despite knowing that

those expenses were not based on information provided by Mr. Edwin

and therefore were unjustified. (Exhibit 17 1, 6, 14.)

6. K&L Accounting

As stated before, Defendant K&L Accounting is implicated

by the aforementioned section 6694(b) violations carried out by

Defendants Lewis and Brown, its managers. See Demauro, 581 F.2d

at 53.

C. Violations Subject to Penalty Under 26 U.S.C. § 6695

Plaintiff asserts that, in addition to sections 6694(a)

and 6694(b), Defendants violated section 6695. Section 6695(b)

penalizes tax return preparers who fail to sign returns or claims

for refund that they prepared, and section 6695(c) penalizes tax

return preparers who fail to furnish their identifying numbers. 26

U.S.C. §§ 6695(c), (d). Therefore, tax return preparers violate

sections 6695(c) and (d) by paper filing without their signature

and without including Form 8948 identifying themselves as the

preparers. The Court next turns to violations of sections 6695(c)

and (d) shown by Plaintiff that are specific to Defendants Keith

Sang and Kashana Sang.

1. Keith Sang

The Court finds that Plaintiff proffered sufficient

evidence of violations by Defendant Keith Sang that are subject to

penalties under sections 6695(c) and (d). Lorraine Anderson stated

in a declaration that Defendant Keith Sang prepared her 2016 and

2017 tax returns, but her 2017 tax return was paper filed with no

preparer signature or identification number. (Exhibit 4 at 1, 21.)

Similarly, Marcia Sedacey stated in a declaration that Defendant

Keith Sang prepared her and her husband’s tax returns, but their

2017 tax return was paper filed with no preparer signature or

identification number, (Exhibit 9 at 1, 6.) Finally, Winston

White’s 2017 tax return was paper filed, with no preparer signature

or identification number, but he stated in a declaration that his

2016 and 2017 tax returns were prepared by “Keith Sang Tax Service.”

(Exhibit 10 at 1, 5.)

2. Kashana Sang

Tashoy Saddler’s 2017 tax return, which was paper filed

without preparer signature or identification number, does not state

any specific individual Defendant’s name, but Ms. Saddler stated

in a declaration that her 2016 and 2017 tax returns were prepared

by Sang’s Income Tax Service Inc. (Exhibit 8 at 1, 6.) Plaintiff

submitted Exhibit 1-C, which includes the EFIN application

submitted by Defendant Kashana Sang as the President of Sang’s

Income Tax Service Inc. (Exhibit 1-C.) Therefore, the Court finds

that Defendant Kashana Sang has violated section 6695 as the

President of the preparation firm, Sang’s Income Tax Service.

In summary, the Court find that Plaintiff has provided

sufficient evidence demonstrating section 6694(a) violations by all

individual Defendants and Defendant K&L Accounting, as the employer

of Defendants Lewis and Brown; 6694(b) violations by all individual

Defendants and Defendant K&L Accounting, as the employer of

Defendants Lewis and Brown; and finally, sections 6695(c) and (d)

violations by Defendants Keith and Kashana Sang.

II. Injunctive Relief Under 26 U.S.C. § 7407(b)(1)(D)

Under section 7407(b)(1)(D), the Court may enjoin a tax

preparer who “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)(1)(D). Injunctive

relief is warranted under section 7407(b)(1)(D) if it is

“appropriate to prevent the recurrence of” the unlawful conduct at

issue, if a tax return preparer has “continually or repeatedly”

engaged in such conduct, and if “an injunction prohibiting such

conduct would not be sufficient to prevent such person’s

interference with the proper administration of [the Internal

Revenue Code] . . . .” Id. § 7407(b)(2).

The Court finds that Defendant Keith Sang, by

continuously filing tax returns using the names and filing

credentials of Defendants Kashana Sang, Lewis, and Brown, even post

the suspension of his EFIN by the IRS, substantially interfered

with the proper administration of the Internal Revenue laws.

Defendants Kashana Sang, Lewis, and Brown substantially interfered

with the proper administration of the Internal Revenue laws by

allowing Mr. Sang to continue preparing tax returns under their

names and filing credentials. Additionally, Plaintiff’s exhibits,

a sample of tax returns prepared and filed by Defendants, (Exhibits

4‒19), and applications for EFINS submitted by Defendants Kashana

Sang, Lewis, and Brown, (Exhibit 1-C), demonstrate that Defendants

sought to evade and hamper the enforcement efforts of the IRS by

changing their business’s corporate name numerous times, changing

their business address, and taking turns applying for a new EFIN

as soon as an EFIN was suspended by the IRS. According to Agent

Gupta’s declaration, Defendant Kashana Sang applied for an EFIN in

December 2010 when Defendant Keith Sang’s EFIN was suspended in

January 2010, and Defendants Lewis and Brown applied for an EFIN

in November 2017, under the business name of K&L Accounting, when

Ms. Sang’s EFIN was suspended on May 23, 2017. (Gupta Decl. ¶¶ 15‒

16, 19‒20; Exhibit 1-C.) Finally, Defendants Keith and Kashana

Sang paper filed 2017 tax returns, prepared in the 2018 preparer

year after Ms. Sang’s EFIN had been suspended by the IRS in May

2107, with no preparer signature or identification number so that

the IRS would have difficulty determining their roles in preparing

the returns. (Exhibits 4, 8, 9, and 10.)

As to whether injunctive relief is appropriate under

sections 7407(b)(1)(A) and 7407(b)(1)(D), the Court concludes that,

considering Defendants’ continuous pattern of filing tax returns

that understated their customers’ tax liabilities, and the

conscious and concerted steps they have taken to avoid IRS

enforcement, injunctive relief is “appropriate to prevent the

recurrence of” their unlawful conduct. 26 U.S.C. § 7407(b)(2).

III. Injunctive Relief Under 26 U.S.C. § 7402

Plaintiff also asserts that injunctive relief is

warranted under section 7402. Section 7402 is a catch-all provision

that permits district courts to issue “orders of injunction . . .

and to render such judgments and decrees as may be necessary or

appropriate for the enforcement of the internal revenue laws,” 26

U.S.C. § 7402(a). Courts in this Circuit have held that “parties

seeking an injunction under section 7402(a) must satisfy the

traditional injunction factors.” United States v. Azeez-Taiwo, 15-

cv-4225(DLI), 2017 WL 4443471, at *4 (E.D.N.Y. Sept. 30, 2017).

See United States v. Webb, No. 06-cv-5317(SLT), 2007 WL 397041, at

*5 (E.D.N.Y. Feb. 1, 2007) (“[U]nlike sections 7407 and 7408,

section 7402(a) does not itself authorize specific injunctive

relief. Therefore, courts have ‘applied traditional equity

considerations when crafting injunctive relief pursuant to this

section.’”) (citation omitted); United States v. Buddhu, No. 08–

cv–0074(CFD), 2008 WL 2355930, at *3 (“Section 7402(a) authorizes

injunctive relief, but does not provide ‘statutory conditions.’

Accordingly, the traditional equitable considerations must be

applied.”) (citation omitted). Therefore, Plaintiff must show that

(1) absent injunctive relief, it will suffer irreparable harm, and

(2) either (a) that it is likely to succeed on the merits, or (b)

that there are sufficiently serious questions going to the merits

to make them a fair ground for litigation, and (3) that the balance

or hardships tips decidedly in favor of Plaintiff. Broccolo, 2006

WL 3690648, at *6.

Here, the likelihood of success on the merits is clearly

established. Plaintiff has submitted evidence of unlawful conduct

specific to each individual Defendant, as described at length by

the Court supra. Plaintiff has also established irreparable harm,

not only in the form of loss in tax revenue, both past and future,

but also the significant resources that have been expended by the

IRS in investigating Defendants and will continue to be expended

if Defendants are not enjoined. (Pl. Mem. at 22‒23.) See Broccolo,

2006 WL 3690648, at *7; Azeez-Taiwo, 2017 WL 4443471, at *5. Given

Defendants’ pattern of repeatedly filing tax returns understating

taxpayer liability and evading IRS enforcement, the Court finds

that there is no remedy at law that would prevent Defendants from

further engaging in violations of the Internal Revenue laws. Azeez-

Taiwo, 2017 WL 4443471, at *5.

In weighing the balance of hardships, though Defendants

will be restrained from making a living as federal tax return

preparers, such harm is outweighed by the harm that would be imposed

on the United States Government, Defendants’ customers who are

subjected to IRS audits and penalties, and public confidence in the

federal tax system. See United States v. Pugh, No. 07-cv-2456(NGG),

2008 WL 926069, at *2 (E.D.N.Y. Apr. 2, 2008) (stating, in weighing

the balance of hardships, that the defendants “will be only

minimally harmed by entry of an injunction, as they do not have a

right to make a livelihood through illegal conduct” and the

“preliminary injunction will prevent customers from having

inaccurate returns filed in their name that might subject them to

overdue tax, penalties and interest”). Consequently, the

evidentiary record supports injunctive relief.

IV. Arguments Made by Defendant Brown

The Court next addresses the arguments made by Defendant

Brown in her opposition and supplemental opposition memoranda.

Defendant Brown argues that Plaintiff “has not provided any

substantive proof that the Defendant’s individual return

preparation activities interfered with applicable practices and

laws.” (Def. Mem. at 7.)

However, Plaintiff has proffered evidence of conduct

subject to penalty under sections 6694(a) and (b) that are specific

to Defendant Brown, in the form of filed tax returns, which list

Ms. Brown as the preparer and her unique PTIN, that claimed

ineligible HOH status, (Morris, Exhibit 8), and false deductions,

(Atkinson, Exhibit 7; Edwin, Exhibit 17). Ms. Brown argues that

the mere indication of her name and PTIN on these tax returns is

not sufficient, (Def. Suppl. Opp. at 2), as she denied having

prepared the 2017 tax returns of Mr. Edwin and Mr. Atkinson and

Defendant Keith Sang may have had unlimited access to her PTIN and

EFIN. (Brown Decl. ¶¶ 6, 7.) Even if it were true that Ms. Brown

did not have any involvement in the preparation of these three

returns, which the Court finds unlikely, given her role as a co-

manager of K&L Accounting and the application for an EFIN filed

under her own name post the suspension of Defendant Kashana Sang’s

EFIN, Ms. Brown is responsible for the use of her PTIN and EFIN by

Mr. Sang. See United States v. Samuels, 702 F. App’x 161, 164 (4th

Cir. 2017) (“The district court did not abuse its discretion in

holding Defendant responsible for those returns filed using his

name and PTIN even absent testimony specifically identifying

Defendant as the preparer.”).

Additionally, Plaintiff, along with its response to

Defendant Brown’s supplemental opposition memorandum, submitted tax

returns, filed in 2020 and 2021 and identifying Ms. Brown as the

preparer by her name and PTIN, in which three individuals with the

same address all falsely claimed HOH status in their individual

returns. (ECF Nos. 37-1, Exhibit 21, at 2, 4, 17, 22, 34, 43; No.

37-2, Exhibit 22 at 2, 4, 16, 18, 31, 33.) These additional

exhibits further support Plaintiff’s position that Defendant Brown

has repeatedly prepared returns that understated her customers’ tax

liabilities such that she should be enjoined pending the resolution

of this action.

Defendant Brown also argues that the customer

declarations should not be considered because they are inadmissible

hearsay. (Def. Mem. at 7.) However, such argument is contrary to

established Second Circuit precedent and decisions of courts in

this Circuit. See Mullins v. City of New York, 626 F.3d 47, 52 (2d

Cir. 2010) (“We . . . conclude that hearsay evidence may be

considered by a district court in determining whether to grant a

preliminary injunction. The admissibility of hearsay under the

Federal Rules of Evidence goes to weight, not preclusion, at the

preliminary injunction stage.”); 725 Eatery Corp. v. City of New

York, 408 F. Supp. 3d 424, 455 (S.D.N.Y. 2019) (“In the Second

Circuit, courts ‘routinely consider hearsay evidence in determining

whether to grant preliminary injunctive relief,’ including

affidavits, depositions, and sworn testimony.”) (quoting Mullins,

626 F.3d at 51‒52.)

Finally, the Court respectfully rejects Defendant Brown’s

argument that Plaintiff has failed to show that violations would

occur in the future. (Def. Mem. at 9.) Ms. Brown states in her

declaration that she did not start preparing tax returns herself

until 2019, (Brown Decl. ¶ 5), and states in her opposition that

she “has been scrupulous in the preparation of her client tax

returns” and “has . . . adopted an even more comprehensive inquiry

for current return preparation customers.” (Def. Mem. at 5, 9.)

However, Ms. Brown’s claim regarding her diligence is undermined

by the additional exhibits submitted by Plaintiff, which

demonstrate that Ms. Brown continued to file inaccurate tax returns

with false deductions in more recent preparer years. (Exhibit 21;

Exhibit 22.)

V. Scope of the Preliminary Injunction

For the reasons stated, Plaintiff’s motion for a

preliminary injunction pursuant to sections 7407 and 7402 during

the pendency of this action is granted. As stated before, section

7407(b) explicitly authorizes the Court to enjoin Defendants from

acting as federal tax return preparers altogether if they have

“continually or repeatedly” engaged in the offending conduct. See

26 U.S.C. § 7407(b). In determining whether Defendants should be

preliminarily enjoined from acting as tax preparers, the Court

looks to “(1) the degree of scienter involved; (2) the isolated or

recurring nature of the fraudulent activity; (3) the [Defendants’]

appreciation of [their] wrongdoing; and (4) the [Defendants’]

opportunities to commit future violations.” United States v. Pugh,

717 F. Supp. 2d 271, 285 (E.D.N.Y. 2010) (internal quotation marks

and citation omitted). The Court agrees with Plaintiff that merely

enjoining specific conduct will not be sufficient to prevent future

interference with the Internal Revenue laws by Defendants. First,

the Court finds that the concerted and conscious steps taken by

Defendants—changing their business name, address, and applying for

an EFIN—to evade suspension of their colleagues and IRS scrutiny

demonstrate their knowing disregard of the Internal Revenue laws;

Defendants, acting as a unit, have repeatedly filed inaccurate tax

returns understating taxpayer liabilities since at least 2016; and

Defendants’ repeated attempts to circumvent IRS enforcement, even

after the suspension of Defendants Keith and Kashana Sang’s EFINs

by the IRS, demonstrate that they will continue to hamper IRS’s

enforcement efforts unless they are enjoined entirely from acting

as federal tax return preparers. For these reasons, Defendants are

preliminarily enjoined from acting as federal tax preparers until

the resolution of this action.

PRELIMINARY INJUNCTION

For the foregoing reasons, Plaintiffs’ motion for a

preliminary injunction is GRANTED.

Defendants, individually and doing business as K&L

Accounting, their officers, agents, servants, employees, and

attorneys, and anyone in active concert or participation with them,

are hereby enjoined from, directly or indirectly:

1. Preparing or assisting in the preparation or filing of

federal tax returns, amended returns, and other federal

tax documents and forms for anyone other than themselves;

2. Advising, counseling, or instructing anyone about the

preparation of a federal tax return;

3. Owning, managing, controlling, working for, or

volunteering for an entity that is in the business of

preparing federal tax returns or other federal tax

documents or forms for other persons;

4. Providing office space, equipment, or services for, or

in any other way facilitating, the work of any person or

entity that is in the business of preparing or filing

federal tax returns or other federal tax documents or

forms for others or representing persons before the IRS;

5. Advertising tax return preparation services through any

medium, including print, online, and social media;

6. Maintaining, assigning, holding, using, or obtaining a

Preparer Tax Identification Number (“PTIN”) or an

Electronic Filing Identification Number (“EFIN”);

7. Representing any person in connection with any matter

before the IRS;

8. Employing any person to work as a federal tax return

preparer;

9. Referring any person to a tax preparation firm or a tax

return preparer, or otherwise suggesting that a person

use any particular tax preparation firm or tax return

preparer;

10. Selling, providing access, or otherwise transferring to

any person some or all of the proprietary assets of the

Defendants, including K&L Accounting, generated by their

tax return preparation activities, including but not

limited to customer lists; and

11. Engaging in any conduct subject to penalty under 26

U.S.C. §§ 6694, and 6695, or that substantially

interferes with the administration and enforcement of the

internal revenue laws.

The parties are ordered to meet and confer and advise the

Court, by Friday, March 4, 2022, how they plan to proceed with this

case.

SO ORDERED.

________ _/s/______________

Kiyo A. Matsumoto

United States District Judge

Dated: Brooklyn, New York

February 26, 2022