Utah Tax Preparer Sentenced to Prison for Tax Scheme and Obstructing IRS

Filing your tax returns can be complicated. Honest mistakes will not be held against you for criminal penalties. However, those who deliberately mislead the Internal Revenue Service (IRS) can be charged with tax crimes and may face serious penalties.

For instance, on January 10, 2023, a professional tax preparer in Utah was ordered to serve 37 months in prison and must pay $1,104,737 in restitution to the U.S. government. The perpetrator attempted to defraud the IRS by concealing his income and assets. Furthermore, after being audited, he attempted to obstruct the government’s investigation by renaming his business and placing it in his family members’ names.

If you are at risk of being charged with a tax crime, you can contact the Tax Law Offices of David W. Klasing for options. Our experienced Dual Licensed Tax Attorneys and CPAs can help assess your case and determine how to proceed. Our phone number is (800) 681-1295.

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, Kovel CPAs 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!

Professional Tax Preparer Convicted of Tax Crimes in Utah

Sergio Sosa of Orem, Utah owned and operated a tax preparation business called Sergio Central Latino. From 2004 through 2020, he attempted to defraud the Internal Revenue Service (IRS) by failing to report his income and assets on his tax returns properly. Specifically, from 2003 through 2017, Sosa had failed to file his returns on time or pay the full amount of taxes he owed. Furthermore, after being audited, he obstructed the government's investigatory efforts by renaming his business and placing it in his kids’ names, using nominees to open business bank accounts, and making false declarations to the IRS.

Accordingly, Sosa is now facing criminal tax penalties, including severe fines and jail time. The tax evader has been sentenced to 37 months of jail time and has to pay $1,104,737 to the federal government.

It is best for taxpayers to report their earnings truthfully to avoid facing the same fate as Mr. Sosa. However, committing an error when filing your tax returns is easy. In some instances, people who make honest mistakes can be wrongfully accused of evading their tax obligations. If you fear being accused of tax fraud, you can seek aid from our Dual Licensed Tax Attorneys and CPAs. Our team is ready to assist with your case.

How Does the IRS Catch Tax Fraud?

There are several different forms of tax fraud. For instance, taxpayers can commit fraud by deliberately failing to report income or intentionally overstating write-offs that they are not entitled to or claiming credits they are not entitled too. The Internal Revenue Service (IRS) can uncover instances of tax fraud in various ways. For instance, the following are common examples of ways the IRS can catch individuals committing these crimes:

The IRS utilizes an Information Returns Processing (IRP) system to try and match information sent by employers and other third parties to the IRS with the information reported by individuals on their tax forms. Typically, the matching is based on information submitted through W-2s (reporting earnings), 1099s (reporting securities transactions, dividends, interest, and non-employee wages), and Schedule K-1s (reporting expenses and income from trusts, estates, partnerships, and S corporations). IRS computers exam the returns of the taxpayers that received this reported information to make sure it has been properly reported on their tax returns.

The IRS computers have become more sophisticated over time. Rather than simply matching and filtering taxpayers’ information, it is suspected that the IRS can now track information like medical records and credit card transactions. If you have encountered a tax issue raised by the IRP system, then you should get in touch with our law firm as soon as you can. Our Dual Licensed Tax Attorneys and CPAs can help protect your interests.

The IRS also regularly catches tax fraud with the assistance of whistle blowers. A whistle blower informs on an individual taxpayer or organization in hopes of receiving a reward or often simply for revenge. For example, an aggravated employee or upset spouse may inform the IRS about unreported income or other illegal actions committed by taxpayers.

There are many reasons a whistleblower may decide to report improper activity. For example, they may do so out of a desire for revenge or a desire to do the right thing. Furthermore, some whistleblowers report illegal activity to the IRS for cash rewards. The IRS may pay a whistleblower a reward of up to 30% of the tax loss that was recovered as a result of the reported information.

Lastly, the IRS can also catch tax fraud through peoples’ social media footprints. IRS agents regularly use social media to locate tax cheats. For instance, posting on social media accounts may reveal that people are living lifestyles that do not coincide with the amount of income reported on their tax returns. However, it is not known whether the IRS is looking into nonpublic social media postings or private communications like emails.

How Long Will You Go to Prison for Tax Evasion?

Those who intentionally evade their tax obligations may serve time in prison. The main consideration in determining how much time will be served is the value of the tax loss the government incurred. Generally, those that create greater tax losses will have to serve more time in jail.

However, other factors may play a role in determining sentencing for tax crimes. For example, a defendant’s criminal history may be analyzed when determining how much time they should serve. If you fear facing prison time for tax evasion, our Dual Licensed Tax Attorneys and CPAs can help mount your defense.

If are Under IRS Criminal Tax Investigation, Under Audit, Facing an Eggshell or Reverse Eggshell Audit, our Lawyers are Here to Help!

If you fear you may be charged with a tax crime, get help from our experienced Dual Licensed Tax Attorneys and CPAs by calling Tax Law Offices of David W. Klasing at (800) 681-1295 or scheduling online HERE.