Marcelino Almaraz, 60, of Holcomb, Kansas, former owner of a tax preparation business, pleaded guilty on Thursday, February 22, 2018 to filing a false income tax return and aiding and assisting in the preparation of false tax returns. In addition to improperly claiming dependents for his clients, Almaraz also cheated on his own returns, underreporting his business income for tax years 2010 and 2011. Almaraz, who has already agreed to pay restitution totaling nearly $400,000 to the Internal Revenue Service (IRS), will be facing hundreds of thousands of dollars in additional fines – plus the possibility of several years in federal prison – when he appears for sentencing on May 14, 2018.
Kansas Tax Preparer Claims False Dependents for Clients, Underreports Own Business Income
Marcelino Almaraz was a successful business owner in Holcomb, Finney County, Kansas, where he operated not only a convenience store, La Popular, but also the aptly-named Accounting Services, which, according to one press release issued by the Department of Justice (DOJ), “provided tax preparation and accounting services.”
Though the roots of his criminal charges were planted in 2011, when Almaraz filed the first of two falsified income tax returns, his legal woes did not begin in earnest until 2016, when prosecutors filed an indictment, or formal charge, alleging that, through Accounting Services, Almaraz participated in the illegal preparation of false and fraudulent tax returns.
Specifically, prosecutors alleged that Almaraz improperly claimed dependents on tax returns prepared for clients, enabling such clients to improperly claim tax credits, deductions, or exemptions for which they otherwise would have been ineligible. As our criminal tax defense attorneys explained in a previous article concerning a similar tax crime in Pennsylvania, claiming false dependents is a relatively common scheme, as it can qualify taxpayers for dependent exemptions, the Child Tax Credit, or other tax breaks, thereby reducing taxable income or tax liabilities. (In one instance, for example, Almaraz claimed on a client’s return four grandchildren as dependents, when in truth, these “dependents” actually “lived with the [client’s] wife in Mexico,” according to DOJ records.)
Of course, the financial gains that might be realized through such a scheme pale in comparison to the potential penalties, as our many accounts of criminal tax case outcomes should make amply clear to our readers. Where the IRS is concerned, the old adage consistently holds true: crime really doesn’t pay.
Appearing in federal court on February 22, 2018, Almaraz pleaded guilty to two federal offenses: one count of filing a false income tax return, arising from his failure to disclose “substantial” business income on his tax returns, and one count of aiding and assisting in the preparation of a false income tax return, arising from his tax preparation work.
Each offense violates a different section of 26 U.S. Code § 7206, pertaining to fraud and false statements, as follows:
- A taxpayer violates 26 U.S. Code § 7206(1) when he or she “Willfully makes and subscribes any return… which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he [or she] does not believe to be true and correct as to every [significant] matter.” In this case, Almaraz willfully underreported his income, despite knowing the figures to be inaccurate.
- Likewise, a taxpayer violates 26 U.S. Code § 7206(2) when he or she “Willfully aids or assists in… the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return… which is fraudulent or is false as to any [significant] matter…”
The statue authorizes harsh consequences for defendants who are found guilty of, or plead guilty to, these offenses, namely a fine of up to $100,000 and a sentence of up to three years in federal prison. However, according to a DOJ press release published February 22, 2018, Almaraz “faces a penalty of up to three years in federal prison and fine up to $250,000 on each count.” Additionally, he will pay restitution totaling $397,552 to reimburse the tax loss his offenses resulted in. Finally, Almaraz may be subject to supervised release, during which he will have to comply with strict requirements determined by the sentencing court, similar to a defendant who is placed on probation, or an inmate who is granted parole. Failure to comply with the conditions of supervised release can trigger various sanctions, up to and including incarceration, depending on the severity of the violation.
California Tax Preparation Service for Businesses and Individuals
Unless you obtain a time extension, your federal income tax return is due on Tuesday, April 17, 2018. That gives you approximately one more month to address any unresolved issues, questions, or concerns you might have with an experienced tax preparer.
Whether you are worried about unfiled tax returns from previous years, are a parent or caregiver who has questions about your eligibility for tax credits, exemptions, or deductions, are the owner of a cash-intensive business that has been targeted for an IRS audit, or simply need help understanding the reporting requirements that apply to your business or family, look to the award-winning team of tax professionals at the Tax Law Office of David W. Klasing for dependable guidance you can trust this tax season. With over 20 years of tax law experience serving individuals and business entities, including foreign companies and expatriates, our knowledgeable team of California tax attorneys, tax preparers, and accountants is ready to provide comprehensive support and, where needed, aggressive legal representation. To discuss your tax matter in a reduced-rate consultation, contact the Tax Law Office of David W. Klasing online, or call us today at (800) 681-1295.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices in San Bernardino, Santa Barbara, Panorama City, and Oxnard! You can find information on all of our offices here.
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Here is a link to our practice overview video on warning signs that an audit has gone criminal.
What is an effective tax defense in an IRS eggshell tax audit?
https://www.youtube.com/watch?v=7qixPqWTtvA
So, you cheated on your taxes and you are under a tax audit…
https://www.youtube.com/watch?v=FZce4jqQJpI
Why should I hire a tax attorney to represent me in a tax audit?
https://www.youtube.com/watch?v=NDwc4GUfBX8
Foreign income and information non-compliance
https://www.youtube.com/watch?v=g2UlIE8oxPA
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