§ 47:1574.2 — Suit to enjoin certain preparers; cease and desist order

Louisiana § 47:1574.2

• Jurisdiction: Louisiana
• Title 47: Revenue and Taxation

Text

§1574.2. Suit to enjoin certain preparers; cease and desist order
A.(1)(a) In a court of competent jurisdiction or the Board of Tax Appeals, the
secretary may commence suit to enjoin any preparer from further engaging in any conduct
described in Subsection B of this Section or from further action as a preparer.
(b) During the pendency of a suit to enjoin, the court or Board of Tax Appeals may
issue a temporary restraining order or preliminary injunction upon a showing by the secretary
that continued conduct by the preparer creates an immediate threat to taxpayers. Any
application for a preliminary injunction shall be assigned for hearing not less than two nor
more than ten days after service of the notice. If the suit is pending in the Board of Tax
Appeals, the hearing and issuance of a preliminary injunction may be conducted by the
chairman or any member of the board designated by him.
(2)(a) If the secretary finds that a preparer has engaged in any conduct described in
Subsection B of this Section and that continued conduct creates an immediate threat to
taxpayers, the secretary may issue an order to the preparer directing the preparer to cease and
desist from the activity or conduct.
(b) The order shall be issued in the name of the state of Louisiana under the official
seal of the secretary of the Department of Revenue and shall be served by certified mail or
personal service.
(c) If the preparer to whom the secretary directs a cease and desist order does not
cease and desist the activity or conduct immediately after service of the order, the secretary
may demand a penalty of twenty-five dollars per return for each violation in the suit to enjoin
provided for in Paragraph (1) of this Subsection.
(d) Nothing in this Paragraph shall authorize the secretary to issue a cease and desist
order to any certified public accountant, enrolled agent, or attorney at law who is authorized
to appear before the board pursuant to R.S. 47:1414.
(e) The secretary shall not be required to issue an order to cease and desist before
seeking an injunction pursuant to Paragraph (1) of this Subsection.
B. In any action under Paragraph (A)(1) of this Section, the court may enjoin the
preparer from further engaging in any conduct specified in this Subsection if the court finds
that injunctive relief is appropriate to prevent the recurrence of this conduct. The court may
enjoin conduct when a preparer has done any of the following:
(1) Prepared any return, report, claim for refund, or other claim that includes a
substantial understatement of a taxpayer's liability due to a frivolous or fraudulent position.
For purposes of this Section, the following terms shall have the following meanings:
(a) "Substantial understatement" means a case in which the understatement of the
amount of tax payable or the overstatement of the amount of tax creditable or refundable
exceeds the greater of ten percent of the tax required to be shown for the taxable period on
the return, report, claim for refund, or other claim or one thousand dollars.
(b) "Frivolous position" means any position that is knowingly advanced in bad faith,
is patently improper, reflects a desire to delay or impede the administration of Louisiana tax
laws by using unreasonable, baseless, unsubstantiated or questionable facts or is identified
by the Internal Revenue Service as frivolous.
(c) "Fraudulent position" means any position taken with the intent to evade taxes or
that is a willful attempt to defraud or evade taxes that are due.
(2) Prepared any return, report, claim for refund, or other claim that includes an
understatement of a taxpayer's liability due to willful or reckless conduct. For purposes of
this Section, "willful or reckless conduct" shall have the same meaning as provided by
Section 6694 of the Internal Revenue Code.
(3) Negotiated a check issued to a taxpayer by the Department of Revenue without
the permission of the taxpayer.
(4) Engaged in any conduct subject to any criminal penalty provided in this Title.
(5) Engaged in any other fraudulent or deceptive conduct that substantially interferes
with the proper administration of the tax laws of the state of Louisiana.
C.(1) If the court finds that a preparer has engaged in any conduct described in
Subsection B of this Section and that an injunction prohibiting the conduct would not be
sufficient to prevent the person's interference with the proper administration of the tax laws
of Louisiana, the court may enjoin the person from acting as a preparer in the state of
Louisiana.
(2) The fact that the person has been enjoined from preparing tax returns or claims
for refund for the United States or any other state, in the five years preceding the petition for
an injunction, shall establish a prima facie case for an injunction to be issued pursuant to this
Section. For purposes of this Section, "state" shall mean a state of the United States, the
District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular
possession subject to the jurisdiction of the United States.
D. Notwithstanding any provision of law to the contrary, if a preparer is prohibited
from preparing returns as part of a criminal prosecution brought pursuant to this Title,
whether by consent or otherwise, this prohibition shall have the same effect and be subject
to the same enforcement provisions as an injunction issued under this Section without the
necessity of a separate suit to enjoin. The criminal court's imposition of a prohibition or the
acceptance of a plea agreement containing such prohibition shall serve as the injunction order
for purposes of this Section.
E.(1) For purposes of this Section, the term "preparer" shall mean any of the
following:
(a) Any person who prepares any return, report, claim for refund, or other claim that
is filed with the secretary of the Department of Revenue.
(b) Any person who owns or operates a business, the primary activity of which is the
preparation of any return, report, claim for refund, or other claim that is filed with the
secretary of the Department of Revenue, and employs one or more persons in such business.
(c) Any person who prepares a substantial portion of a return, report, claim for
refund, or other claim that is filed with the secretary of the Department of Revenue and does
not sign as the preparer, but rather has the taxpayer sign as if the return, report, claim for
refund, or other claim were self-prepared.
(2) Nothing in this Subsection shall be construed to include in the definition of
"preparer" either of the following:
(a) Any employee who prepares a return, report, claim for refund, or other claim for
the employer by whom he is regularly and continuously employed.
(b) An attorney or other tax advisor whose association with a return, report, claim
for refund, or other claim is limited to that of rendering advice to a taxpayer or preparer and
was not otherwise involved in preparing the return, report, claim for refund, or other claim
for which advice was rendered.
F.(1) Any preparer who violates an injunction or order pursuant to this Section shall
pay a penalty of not less than fifty dollars for each return, report, claim for refund, or other
claim prepared in violation of the injunction.
(2) The penalty provided for by this Subsection shall be an obligation that may be
assessed, collected, and enforced against the preparer in the same manner as if it were a tax
due.
G.(1) If the secretary files a motion alleging a violation of an injunction or order
issued pursuant to this Section, a hearing shall be held in not less than two days or more than
ten days, exclusive of holidays, to determine whether a violation has occurred.
(2) Upon a showing by the secretary that there has been a violation of the injunction,
the court or Board of Tax Appeals shall consider the violation to be a contempt of the court
and shall punish the violator in accordance with law, and every violation of the injunction
shall be considered as a separate act of contempt.

Legislative History

Acts 2018, No. 526, §1, eff. July 1, 2018; Acts 2022, No. 429, §1, eff. June 15, 2022.