Bad magic; this will hurt a bit; the Queen is dead; and other highlights of recent tax cases.
Detroit: Former local tax preparer Ann Reid, 68, has pleaded guilty to committing tax fraud over a four-year span.
Reid prepared and filed returns that she knew contained misrepresentations about small businesses. In each instance, the false information caused the IRS to issue undeserved large refunds.
Between January 2016 and April 2019, Reid prepared and filed hundreds of returns that falsely represented that the taxpayers operated small businesses and included deductions for false expenses and inflated charitable contributions.
She faces up to three years in prison, a $100,000 fine and a year of supervised release on each of the five counts to which she pleaded guilty. Sentencing is Oct. 17.
Jenkins Township, Pennsylvania: Tracey Biscontini, owner of the publishing company Northeast Editing, has pleaded guilty to failing to pay federal payroll taxes.
From 2014 through 2019, she was required to withhold federal payroll taxes from employees’ pay and to pay the money over to the IRS. Biscontini acknowledged that she consistently failed to do this for the years indicated, further admitting that the loss was between $250,000 to $550,000.
She has agreed to make $448,617.38 in restitution to the IRS.
Liaoning Province, China: A bookkeeper/accountant surnamed Wang, according to published reports, has been arrested for embezzling $677,000 from her employer to pay for religious rites to keep her boyfriend.
Her boss noticed nothing abnormal with the company accounts until last August, reports said. Police later seized luxury bags and clothes she’d bought with the stolen money.
Investigators also reportedly discovered that Wang began to divert the company’s money in March 2018, when she was on the verge of losing her boyfriend. She was tempted by fortune-telling and horoscope adverts online, reports said, and she developed the belief that she could rely on “black magic” religious rites to keep her boyfriend. She soon found an online “spiritual master,” reports said, to whom she paid the equivalent of $55,000. She then met another master who convinced her that a Thai-style black magic rite would make her boyfriend like her more, reports said, and last year, she paid the second master 3.89 million yuan.
Reports said that after being caught Wang still believed that the rites had brought her good luck because her boyfriend did not leave her and she said she had no regrets about what she had done.
New London, Connecticut: Dr. Boulos Hanna, a.k.a. Paul Hanna, 66, of East Lyme, Connecticut, has pleaded guilty to tax evasion.
Hanna is the sole owner of Paul Hanna DMD PC, a dental practice, where he takes fees from patients in the form of personal checks, cash and credit card payments. He owns the building where his practice is; the practice pays rent to Hanna individually.
For each of the 2000 through 2009 tax years, Hanna filed a 1040 for himself and his wife and paid the tax due for those years, typically through withholdings during the year.
For the 2010 through 2012 tax years, Hanna filed a 1040 for himself and his wife but did not pay the tax owed. From about April 2012 through 2017, he was subject to IRS collections enforcement for the 2010 through 2012 tax years, including such forced collection activity as liens on property and seized payments taken by way of levy.
From 2013 through 2020, Hanna earned some $1.6 million in taxable income from his work as a dentist and from rental income. He failed to file returns for any of those years, resulting in a loss to the IRS of $244,541.
Hanna attempted to evade assessment of tax by paying himself “management fees” instead of a reasonable wage, operating in cash by self-endorsing business checks to himself and cashing these checks to keep money out of his personal bank accounts, and by paying personal expenses directly from his business accounts without reflecting those payments as income.
Sentencing is Oct. 18. Hanna faces a maximum of five years in prison.
Charlotte, North Carolina: Tax preparer Jessica Earlene Truesdale, 49, has been sentenced to 20 months in prison for preparing and filing false returns.
She owned and operated Queen City Financial Co., a tax prep business with three area locations. Between 2014 and 2017, she prepared and filed fraudulent returns for clients and earned at least $1 million in prep fees, which were paid directly from her clients’ refunds.
Truesdale used several methods to falsify clients’ returns, including claiming false filing status and exemptions, American Opportunity Credits, education credits and Earned Income Tax Credits, among others. Truesdale’s clients reduced their tax liabilities and received fraudulently inflated refunds.
Truesdale regularly failed to review the completed returns with clients, except to inform them of the amounts of their refunds. Some clients later received correspondence from the IRS or the State of North Carolina questioning their returns.
Truesdale, who pleaded guilty last year, was also ordered to serve a year of supervised release and to pay $1,177,615 in restitution.
Kouts, Indiana: Clinic owner Kathy Lynch has been sentenced to 15 months in prison, to be followed by a year of supervised release, after being found guilty of nine counts of willful failure to pay federal employment taxes.
Lynch failed to remit and pay federal payroll taxes for the local nursing clinic she owned and operated. Over 16 years, she withheld payroll tax money from employees’ paychecks; instead of paying those taxes over to the IRS, she kept more than $474,000, which she spent on personal and business expenses.
Durham, North Carolina: Jayton Gill, 35, has been sentenced to 21 months in prison, to be followed by a year of supervised release, for operating an unlicensed money transmitting business and willful failure to file a return.
From 2015 to 2021, Gill operated an unlicensed money transmitting business involving the exchange of millions of dollars of cash and other monetary instruments for cryptocurrencies such as Bitcoin and Monero. He conducted thousands of transactions involving thousands of Bitcoins, advertising the business on various public websites; he claimed on one website that he had conducted more than 4,200 transactions with 2,700 different parties. Gill also conducted unlicensed money transactions in person and via the U.S. Postal Service.
Gill also failed to file personal returns for tax years 2015 through 2019, despite earning significant income from his business and from investing in cryptocurrency.
Gill, who pleaded guilty last year, was also ordered to pay a forfeiture money judgment of $475,000.
Newark, New Jersey: Restaurateur Jorge Fernandes of West Orange, New Jersey, has pleaded guilty in connection with failing to withhold and pay over payroll taxes.
Fernandes was half-owner of two restaurants in the Ironbound section of Newark. He was aware of his legal obligation to collect payroll taxes from the employees but instead paid a number of them off the books, failing to collect any payroll taxes from them.
His conduct caused a loss of $715,780 for tax years 2016 through 2017.
Fernandes pleaded guilty to an information charging him with two counts of failing to collect payroll taxes for the period. Each of the charges carry a maximum of five years in prison and a $10,000 fine. Sentencing is Nov. 20.
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