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Mother and Son Convicted on Charges of Conspiracy and Filing a Fraudulent Tax Return

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Mother and Son Convicted on Charges of Conspiracy and Filing a Fraudulent Tax Return

Mother and Son Convicted on Charges of Conspiracy and Filing a Fraudulent Tax Return

Family businesses are a large part of American history. From the chocolate from Mars, Incorporated or the low-cost household goods from Walmart, families have started some of the largest and most successful companies in the world. But even companies like Mars and Walmart started small. One of the potential pitfalls of owning a small business is ensuring that records are meticulous and laws are adhered to in the day-to-day operations of the business. As a small family-operated business found out the hard way, the IRS will come after businesses and their owners who intermingle their business and personal affairs. Last week, Howard Hsu and Tracy Chang were convicted on charges of conspiracy and filing a false tax return.

According to a press release by the Department of Justice, Howard Hsu owned and operated Didsee Corporation (Didsee), a Nevada company that provided advertisement marketing services to online websites and marketplaces Hsu’s mother, Tracy Chang, was responsible for the bookkeeping of Didsee. She also served as Didsee’s President. In her role, she opened bank accounts and performed other financial duties for the company.

At trial, prosecutors presented evidence that between 2008 and 2009, Hsu and his mother conspired to file fraudulent tax returns. In accordance with their conspiracy, prosecutors also alleged that the pair amended Didsee’s 2007 tax return. For the three tax returns at issue, the government presented evidence that Chang prepared and presented false summaries of expenses to Didsee’s tax return preparers that included expenses that were not true expenses of Didsee, such as Hsu’s personal expenses. Further, some of the expenses that were presented to the return preparers were expenses that were never incurred.

Chang signed the three returns at issue as a representative of Didsee. The IRS estimated that the fraudulent tax returns yielded a total of $400,000 lost tax revenue, had the illegal activity not been caught. Although sentencing wasn’t a part of the six-day trial, Hsu and Chang face up to five years in a federal prison for the conspiracy count and up to three years in prison for each of the fraudulent return counts. In addition to the prison sentences, they will likely also face supervised release and substantial fines.

Knowing When to Contact an Experienced Tax Attorney

Running a small to medium sized business can be hard and complying with tax laws against commingling expenses may be burdensome at times, but the alternative is exemplified in the above case. If you own a small business and are unsure if you are in compliance with federal or state tax laws, it may be in your best interest to reach out to an experienced business tax attorney. Likewise, if you are under examination or investigation by the IRS or state taxing authorities, a criminal tax defense attorney may be able to help you mitigate or even eliminate the potential negative consequences of a criminal tax prosecution.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have represented taxpayers in a myriad of different serious tax situations ranging from eggshell audits to full-blown tax litigation. No matter how heavy your tax issue feels on your back, our team of zealous advocates are ready to share the burden and develop a sound strategy to mitigate potential negative consequences. Don’t lose sleep over tax troubles. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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