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Ohio Businessman Pleads Guilty to Filing False Returns

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Ohio Businessman Pleads Guilty to Filing False Returns

According to a Department of Justice press release, Abdikarim Abdirahman, 57, of Columbus, Ohio, pleaded guilty in federal court this week to charges related to the filing of a false tax return. Although the case below is an outlier and is not representative of the tax activity of all business owners and operators, it does serve as a reminder that the IRS and state taxing authorities do scrutinize and will prosecute cases where business owners attempt to take an unlawful tax benefit, especially when employees are involved.

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General Manager Stole Personal Information and Caused Tax Returns to be Filed

Prosecutors and government investigators alleged that Abdirahman worked in a top management position at Diversity Home Health Care, a local business that provided home health care services in the areas in and around Springfield and Columbus. In his role, Abdirahman had access to sensitive patient information, including Social Security numbers. Abdirahman drafted and transmitted documentation to the IRS that falsely asserted that he had hired and paid various individuals who did not, in fact, work for Diversity Home Health Care.

In furtherance of his illegal activity, Abdirahman lied to Diversity Home Health Care’s tax preparer and likewise falsely claimed that the business had paid such individuals hundreds of thousands of dollars worth of compensation. Abdirahman’s end goal was to have the tax preparer write the fake wages off as a business expense. Additionally, Abdirahman caused individual tax returns to be filed for the fake employees reporting the non-existent income and requesting a tax refund.

In sum, the IRS and Department of Justice estimate that the tax loss caused by Abdikarim exceeded $540,000. Sentencing has not yet been scheduled but will likely be next year. Abdikarim faces a maximum prison sentence of three years. Additionally, Abdikarim will likely be sentenced to serve a term of supervised release upon the completion of his physical incarceration. Finally, he will likely be ordered to pay some or all of the tax loss back to the IRS in the form of restitution.

The Multitude of Tax Considerations for Business Owners and Operators

If you are a business owner, you are likely not involved in activity as brazen as the defendant in the story above. Nonetheless, it can be easy for a business owner or operator to fall into tax noncompliance. For instance, with the proliferation of the gig economy, many businesses must determine whether their workforce is comprised of employees or contractors. The tax and other legal consequences between the two are critical in nature. Many employers believe that the employer simply dictates the classification of the worker. But that simply is not the case. Worker classification is determined through careful analysis of the facts and circumstances surrounding the relationship between the business and the particular labor resource.

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Whether you are trying to determine the classification of your workforce, are attempting to make your business more tax efficient, or have received a notice that your business or individual tax returns have been selected for examination, an experienced tax attorney will add value and help you answer your complex tax and legal questions.

Contact an Experienced Tax Attorney Today

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have worked with business owners of companies ranging in size from mom and pop to middle market. If you have received notice from the IRS or state taxing authorities that your payroll tax withholding, accounting, and remittance procedures are being scrutinized, our team of zealous advocates will help you develop a legal strategy aimed at preserving the integrity of you and your business. Do not let the threat of a criminal tax investigation or tax prosecution keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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