Tax Preparer in California Faces Prison Sentence for Filing False Returns

Tax preparers, in general, provide a very helpful service to most businesses and individuals. Their primary role is to ensure compliance with tax regulations while maximizing their clients’ eligible deductions and credits. Unfortunately, taxpayers can encounter serious legal issues due to their preparers’ improper conduct.

For example, in 2023, a tax preparer from California named Andrew Zepeda Hansack was sentenced to six years in prison for two counts of aiding and assisting in the preparation of false tax returns. If your tax preparer engaged in illegal conduct, then our attorneys will help determine the proper course of action. You may be able to avoid criminal penalties by making a voluntary disclosure to the Internal Revenue Service (IRS). You should never just amend returns where potential fraudulent returns have been filed as they can viewed as a criminal admission.

Seek assistance from our experienced Dual-Licensed Tax Lawyers & CPAs by calling the Tax Law Offices of David W. Klasing today at (800) 681-1295 or click here to book a reduced rate initial consultation online.

California Tax Preparer Sentenced to Six Years in Prison

A tax preparer named Andrew Zepeda Hansack from California has been sentenced to six years in federal prison for knowingly filing thousands of false tax returns, resulting in the IRS losing over $3 million. The sentencing was handed down by United States District Judge Stephen V. Wilson, who deemed Hansack’s offenses as one of the most serious he had encountered during his time on the bench. Hansack pleaded guilty to two counts of aiding and assisting in the preparation of false tax returns and received the maximum sentence for each count.

Hansack’s fraudulent activities involved filing tax returns with fabricated itemized deductions for medical expenses, sales tax, mortgage interest payments, and other categories while working at AJ Loyal Income Tax Service, a Riverside-based company. He continued this misconduct from 2015 to 2019, filing approximately 2,533 tax returns on behalf of his clients with false deductions. As a result, the IRS was unable to collect the correct amount of taxes owed by these clients, leading to a total loss of around $3.37 million.

The government did not treat Hansack’s crimes lightly. Alongside the six-year prison sentence, Hansack has been ordered to pay a $50,000 fine and was subjected to restitution of about $3.3 million.

If your tax preparer engaged in fraudulent activities, our Dual-Licensed Tax Lawyers & CPAs can help resolve your legal issues. Our team will explain the next steps to take. Further, we will fight to protect your rights and interests.

Can You Be Penalized if Your Tax Preparer Files False Returns?

In some circumstances, taxpayers can face consequences, including potential criminal tax exposure, if their tax preparer breaks the law while filling out their tax returns. However, the extent of the taxpayer’s liability depends on the specific situation, their involvement, and whether they knew about the tax preparer’s illegal activities. Every taxpayer signs a jurat that states “Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.

However, if you genuinely had no knowledge of your tax preparer’s fraudulent actions and we can prove your innocence, then you may be able to avoid the most serious legal consequences, incarceration, and restitution. In this case, the government may solely focus on prosecuting the preparer responsible for illegal activities.

Still, taxpayers are ultimately responsible for the accuracy of their returns, even if they hire tax preparers. For instance, if you fail to review your tax return before submission and it contains fraudulent information, then you may be subject to criminal prosecution. The failure to properly review your return will be considered, at best, negligence on your part as a taxpayer. Also, you can face legal consequences if you exhibit “willful blindness” by ignoring red flags or signs of fraudulent activities. Never take a position on a tax return that seems too good to be true. It’s also much harder to explain a long history of substantially underreporting your taxes via a fraudulent tax preparer. At some point you should have known better.

Furthermore, if you were aware of and actively participated in your tax preparer’s fraudulent activities, you can potentially face conspiracy charges to commit tax fraud. This is a serious offense that can lead to criminal tax prosecution in addition to tax evasion charges.

What Should You Do If You Have a Long History of Cheating on Your Taxes, With or Without the help of a Tax Preparer to Avoid Criminal Prosecution?

If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.

Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!

What is the Role of a Tax Preparer?

Tax preparers assist individuals and businesses in fulfilling their federal and state income tax obligations. Generally, preparers strive to ensure compliance with current tax regulations while minimizing their clients’ tax obligations. The following is a more specific analysis of their many roles:

Information Collection

Tax preparers collect essential financial information from their clients, which includes details of income, expenses, deductions, credits, and other relevant data. They often use tax organizers or questionnaires to facilitate the process and ensure that no essential information is overlooked.

Tax Analysis

Once the necessary financial data is gathered, tax preparers analyze the information to determine the appropriate tax treatment for each item. They apply current tax laws and regulations to optimize tax outcomes for their clients while staying within the bounds of legality.

Filing Tax Returns

After analyzing the financial information, tax preparers utilize the data to complete and file the appropriate tax returns on behalf of their clients. For individual taxpayers, this typically involves filing IRS Form 1040, while businesses may file various forms depending on their entity type (e.g., Form 1120 for corporations or Form 1065 for partnerships).

Maximizing Deductions and Credits

Tax preparers actively search for legitimate deductions and credits that can reduce their clients’ tax liabilities. They may suggest strategies for tax planning and optimization, such as contributing to retirement accounts, utilizing tax-advantaged investments, or taking advantage of available credits.

Tax Compliance

Ensuring compliance with ever-changing tax laws and regulations is a vital part of a tax preparer’s role. They must stay informed about the latest tax code updates, local regulations, and IRS guidelines to accurately complete tax returns and avoid penalties for errors or omissions.

Communication with Clients

Effective communication is essential for tax preparers to fully understand their clients’ unique financial situations. They must be able to explain complex tax concepts in a clear and understandable manner and provide advice tailored to their clients’ needs and objectives.

Record Keeping

Tax preparers maintain organized records of their clients’ tax documents and filings. This documentation is crucial for both future reference and compliance with professional standards.

Call Our Dual-Licensed Tax Lawyers & CPAs Today for Help with Your Tax Issues

Seek guidance from our experienced Dual-Licensed Tax Lawyers & CPAs at the Tax Law Offices of David W. Klasing by dialing (800) 681-1295.

We Are Here for You

Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.

In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) California based satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad, Sacramento. We also have satellite offices in Las Vegas Nevada, Salt Lake City Utah, Phoenix Arizona & Albuquerque New Mexico.

Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords, and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. 

More Commonly Asked Tax Audit Questions

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