Farming it out; short circuited; California dreamin’; and other highlights of recent tax cases.
Marshall, Texas: Tax preparer Boyd Lynn Butcher, 51, has been sentenced to three years in prison for a federal income tax violation.
Between 2015 and 2017, he operated a tax prep company under the name Boyd’s Tax Service. He prepared more than 450 federal returns for third parties for a fee even though he was not authorized by the IRS to prepare tax returns for others. Butcher created false or fraudulent information to generate unwarranted tax refunds, causing a total tax loss to the IRS of more than $317,252.
For example, he prepared a 2015 return using software designed for taxpayers who self-prepare returns. The return did not reflect that Butcher had prepared and filed it on behalf of another individual and fraudulently stated that the taxpayer was entitled to claim car and truck expenses from a farming business; Butcher admitted that he knew the taxpayer did not have a farming business.
Butcher was also ordered to pay $317,252 in restitution.
Dallas: A federal court has permanently enjoined tax preparer Ashley Diondria Fisher from preparing federal returns for others and from owning, operating or franchising any tax prep business, among other prohibitions.
The complaint alleged that Fisher operated a tax prep business under the brand names Integrity Tax Services and Integrity Tax Returns, which filed returns claiming false business income or losses, false household help income and fabricated education credits.
The complaint also alleged that the IRS previously suspended nine of Fisher’s EFINs. Fisher then allegedly used her aunt’s identity to apply for and use EFINs and, subsequently, used EFINs in the names of others. The complaint also alleged that Fisher operated as a ghost preparer.
The IRS estimates that Fisher caused a tax loss of more than $3 million for 2014 through 2019 alone.
The district court previously entered a preliminary injunction barring Fisher from preparing returns for others and has now made that disallowance permanent. Terms of the order require that Fisher send notice of the injunction to each client for whom she prepared federal returns and post a copy of the injunction in places where she conducts business, including social media accounts and websites.
Fisher, who consented to the permanent injunction, agreed to disgorge $195,468.59 in prep fees to the U.S.
Fremont, California: Business owner Cuong Chi Quan, a.k.a. Roger Quan, 56, of Milpitas, Calif., has been sentenced to 10 months in prison for underreporting income by nearly $4.5 million.
Quan, who pleaded guilty a year ago, owned and managed QXQ Inc., a manufacturer of circuit board test fixtures that shipped to customers in the U.S. and abroad. He admitted that since before 2014 QXQ had maintained two QuickBooks bookkeeping files. One set recorded sales to customers in the U.S. and all QXQ expenses; the second recorded sales to customers in Asia.
Quan directed QXQ customers in Asia to wire their payments to QXQ bank accounts in New Zealand. The income and expenses of QXQ were reported on Quan’s 1040s. He provided his tax preparer only with the file that recorded QXQ sales to customers in the U.S and the expenses and did not provide his preparer with or disclose the existence of the bookkeeping file that recorded QXQ sales to customers in Asia or the statements from his and QXQ foreign bank accounts, which included significant interest.
He omitted income that caused his 2017 federal income taxes to be underreported by $1,783,339.
He must pay $8,167,733 in restitution to the IRS for underreported federal income tax for 2014 through 2018. He was also fined $35,000 and must serve three years of supervised release.
Sedalia, Missouri: Dentist Nohaud Naseef Azan has been sentenced to a year and a day in prison for concealing more than $617,000 in earnings from the IRS over six years.
In 2011, the IRS audited Azan and his practice in connection with the improper deduction of personal expenses on his corporate returns over the three prior years. Azan admitted that in response to the audit and in an effort for his business to continue to pay for personal expenses he cashed patients’ checks written out to the dental practice or deposited them into a personal bank account.
The IRS identified more than 1,000 checks Azan cashed or deposited from 2011 through 2018. Azan admitted that he used funds from the cashed checks for personal expenses, such as gambling, and failed to report them as income on his personal and corporate tax returns. Azan cashed $617,472 in patients’ checks from 2013 to 2018.
The loss to the IRS totaled $269,517. Azan, who pleaded guilty in 2022, was also ordered to pay that amount in restitution to the IRS.
Victorville, California: Tax preparer Stephen Jake McGonigle has been sentenced to 10 years in prison for leading multiyear tax fraud conspiracies across three countries.
McGonigle,
The IP addresses used to file the fraudulent returns were traced to Southern California cities and to McGonigle’s home in Fallbrook and various office spaces that he leased. Some of the addresses were also traced to Costa Rica, where police surveillance and travel records confirmed that McGonigle and his conspirators opened an office and hired employees to help file additional fraudulent returns.
McGonigle’s scheme fraudulently sought more than $10 million from federal and state tax authorities and caused a loss of $1,230,175. Prosecutors have secured guilty pleas from two co-defendants, who will be sentenced in the coming months.
McGonigle was also ordered to pay $1,230,175 in restitution.
Chicago: Exec Abraham Kiswani, of Burbank, Illinois, has been sentenced to two years in prison for evading more than $3.7 million in federal and state income taxes.
He was president of World Security Bureau, d.b.a. World Security Agency. From 2010 through 2013, Kiswani concealed his wages, compensation and income from the IRS. Kiswani directed the individual in charge of payroll to stop issuing payroll checks to him and to instead pay him with checks falsely categorized as “subcontracted services.” Kiswani also caused the business to pay a wide range of personal expenses that he caused to be falsely identified as business expenses.
He failed to report some $10 million in income, resulting in a tax loss to the U.S. and the State of Illinois totaling some $3,708,065.
Kiswani, who pleaded guilty last year, was also fined $10,000.
