Coverage Update: California CPA Sentenced in False Return Case

As we welcome the New Year, taxpayers around the country begin to think about their tax filing obligations. W-2s are mailed, 1099s are generated, and taxpayers either prepare their tax returns themselves or turn to a tax professional to prepare their annual tax filings. This posting is an update to a story that we brought to our readers last year and involves a tax preparer that assisted a client in preparing false returns that omitted large amounts of income.

According to a December 14th, 2018 Department of Justice press release, Marc Howard Berger was sentenced to serve eight months in a federal prison. Earlier in 2018, he was convicted of willfully assisting in the preparation of three false Forms 1040 for tax years 2011, 2012, and 2013. You can find our coverage of the criminal trial here. Berger, who is a Certified Public Accountant, assisted in the preparation and filing of the Forms 1040 at issue for his client and codefendant G. Steven Burrill.

As we explained in our previous reporting on this story, Burrill owned several companies including Burrill Life Sciences Capital Fund III L.P., a $283 million investment fund focused on the life sciences industry. According to evidence introduced at Berger and Burrill’s three-week jury trial, Burrill transferred over $18 million from Burrill Life Sciences Capital Fund III L.P. to his personal management companies. Although management companies routinely receive payments for management services rendered to and on behalf of funds, the amounts transferred far exceeded the agreed-upon management fees.

Any accession to wealth is includible in gross income and must be reported on a taxpayer’s return. When Berger assisted in the preparation of Burrill’s tax returns between 2011 and 2013, he did not include monies siphoned from the investment fund, resulting in an underpayment of tax exceeding $4 million.

In addition to the eight-month prison sentence imposed, The Honorable Richard Seeborg sentenced Berger to serve one year of supervised release and pay a fine of $20,000. According to the press release, he will report to federal prison in July of 2019. Additionally, the DOJ press release indicated that Burrill pleaded guilty on Dec. 7, 2017 to one count of investment-adviser fraud in violation of 15 U.S.C. §§ 80b-6 & 80b-17, 18 U.S.C. § 2, and 17 C.F.R. § 275.206(4)-8, and one count of filing a false income tax return in violation of 26 U.S.C. § 7206(1). He was sentenced to 30 months in prison on December 4, 2018.

Whether you are a taxpayer who has used the services of a professional to prepare your annual tax return or if you yourself are a tax preparer, the takeaway from this story remains the same: the IRS and Department of Justice will drop the hammer on all parties involved in tax wrongdoing. Taxpayers are responsible for paying the correct tax liability, regardless of who prepared the tax return.

If you are facing an IRS or state tax examination, or would like the opinion of an experienced tax attorney with regard to an issue arising out of your tax return, you should not hesitate to contact a tax defense attorney. Not only will a tax attorney assist in the technical tax aspects of your examination or return, they can also provide critical guidance around IRS and state tax procedure.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing taxpayers from all walks of life dealing with a myriad of different tax issues. From accusations of tax evasion resulting from an IRS or state tax examination to worker classification audits, our zealous advocates are standing by to develop a strategy aimed at protecting your financial and physical freedom. The threat of a criminal prosecution can be just as burdensome as actual incarceration. Do not let the threat of criminal charges keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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