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California man settles for plea agreement in tax crimes case

On Behalf of | Dec 6, 2011 | IRS, Tax Crimes |

A California owner of a painting business recently pled guilty to tax crimes. The IRS had accused him of paying cash to undocumented workers, alleging that the man had used secret accounts to pay the employees.

Prosecutors alleged that the man kept separate business bank accounts for his business from 2003 to 2005. The man’s accountant claims to have been unaware of the accounts, which were found not to be disclosed on the business owner’s tax returns. In 2006, the IRS audited the man and his wife. According to the United States Attorney’s Office, the man did not initially disclose the secret accounts during the investigation. However, when investigators reviewed his receipts, it was apparently discovered that $200,000 in income was not accounted for.

In 2007, the IRS issued a summons for all the man’s bank accounts. He then admitted to three secret accounts that totaled about $2 million. The primary issue in the case was that the federal government claimed to have lost $28,451 in tax revenue.

In the end, the business owner pled guilty to one count of filing a false tax return. The tax crimes plea was part of an agreement the man and his attorney reached with prosecutors. The man had been initially indicted on three counts of filing a false return and eight counts of failure to collect and pay employment taxes.

The maximum sentence the California business owner faces is three years in prison and up to a $250,000 fine. He will now have the opportunity to persuade the judge to sentence him on the lower range of federal sentencing guidelines. To accomplish that, the man will be required to offer the court mitigating circumstances that may help sway the judge’s decision.

Source: mercurynews.com, “South Bay paint business owner pleads guilty to tax fraud,” Mike Rosenberg, Nov. 15, 2011


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