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Ex-IRS Agent Accused of Filing Error-Filled Returns, Costing $42M in Lost Taxes

Published

7 months ago

April 8, 2024

By Annette Cary, Tri-City Herald, Kennewick, Wash. (TNS)

A Kennewick tax preparer cost the United States $42 million in lost tax revenue between 2017 and 2020 after filing tax returns that were riddled with errors, fabrications and fraudulent entries, alleges the Department of Justice.

The Department of Justice filed a civil complaint in Eastern Washington District U.S. Court on Tuesday asking a judge to ban Donald J. Taylor from preparing federal tax returns or owning or operating a tax return preparation business.

“Many customers now face large income tax deficiencies and may be liable for sizable penalties and interest,” after Taylor understated their tax liability or inflated their refunds, according to a court document.

The IRS is identifying his customers, determining their correct tax liabilities, pursuing refunds that were erroneously issued and collecting additional taxes and penalties, according to a court document.

The complaint also asks that U.S. Judge Stanley Bastian require Taylor to pay the U.S. government fees and payments he received from customers for whom he prepared tax returns with false or fraudulent claims.

If Taylor is not barred from preparing tax returns or doing related business, he is likely to continue his behavior, the Department of Justice said in the complaint.

It pointed out that Taylor was issued penalties totaling $62,250 for reckless or willful understatement of tax liability on the returns or refund claims of his customers from 2007 to 2010, but it said that did not deter him from continuing to prepare tax returns with allegedly fraudulent claims.

“Taylor’s conduct is more serious because he was previously employed by the IRS,” said the court complaint. “As part of his training, he would have known of a return preparer’s duty of due diligence, and the consequences of failing to discharge that obligation.”

He worked for the IRS investigating and auditing taxpayers from 2002 through 2008, according to a court document.

In 2009 he entered the private accounting practice of Thomas M. Owen, CPA, at 100 N. Morain St., Kennewick. As a tax manager and tax preparer he prepares tax returns without supervision or review there, according to a court document.

The Department of Justice accuses Taylor of taking advantage of the differences between running a business as a sole proprietorship and an S corporation.

A sole proprietor reports any income and expenses on their individual tax returns, while an S corporation reports income, deductions and loss on a corporate tax return and includes separate forms for shareholders in the company to report income and losses on their own tax returns.

He abused the S corporation requirements to reduce customers’ tax liabilities, according to the Department of Justice.

That included decreasing the amount of wages that employees received and reporting the money as corporation distributions to them to reduce their tax liability, according to the Department of Justice. He also fabricated business deductions and reported improper deductions, the Department of Justice said.

Accusations of fraudulent tax deductions

The complaint filed against Taylor details issues with tax returns he prepared for 10 businesses.

Among the many allegations in the complaint are:

Claiming unsubstantiated business deductions for one business that owns no vehicles or assets, including $6,710 in vehicle expenses, $29,186 for repairs and maintenance, and $22,366 for insurance.
Claiming $3,557 in office expenses for two years for a business, when the tax preparation customer said only $76 was spent.
Expensing $67,471 in depreciation for three vehicles, knowing that the vehicles were privately owned rather than owned by the company.
Reporting that a business owned a building and land worth $90,000 and had a mortgage of nearly that much, then taking a depreciation deduction of $2,545, and also claiming a $17,577 deduction for a new roof. However, he knew the company did not own the business or land and had no mortgage, according to the customer who hired him for tax preparation.

Taylor prepared 779 returns for S corporations between tax years 2017 and 2020.

The Department of Justice concluded there was a 96% error rate on those returns to reach its conclusion of $42 million in tax harm to the federal government, according to a court document.

His alleged conduct also harmed the public by undermining public confidence in the federal tax system an encouraging widespread violations of tax laws, according to the complaint.

“Taylor’s illegal conduct also causes intangible harm to honest tax return preparers, because by preparing returns that falsely or fraudulently inflate the customers’ refunds, Taylor gains an unfair competitive advantage over tax return preparers who prepare returns in accordance with the law and who as a result may have fewer customers,” the complaint said.

Federal court documents do not yet list an attorney for Taylor.

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RightTool Wins 2024 Accountant Bracket Challenge

Published

7 months ago

April 12, 2024

Business Finance News

QuickBooks automation tool RightTool is the champion of the 2024 Accountant Bracket Challenge, presented by Accounting High, as the 3 seed defeated 1 seed CPA Jason Staats, host of the Jason Daily podcast, by a score of 355 votes to 110 votes in the final.

“To everybody in the RightTool Facebook community and all the RightTool users, all of you came together and helped us get the most votes, so I wanted to thank you guys for being the best community in the industry, in my opinion,” said Hector Garcia, CPA, co-founder of RightTool, during the championship final show, which was streamed by Accounting High on YouTube and LinkedIn earlier this afternoon.

RightTool joins accounting and bookkeeping app Uncat as winners of the ABC Tournament. In the inaugural Accountant Bracket Challenge last year, Uncat defeated Staats 339-190 in the championship match.

“I think what we’ve learned is … machines win,” Staats said about his consecutive losses in the tournament final. “We thought that would be down the road, but it’s happening.”

A grand total of 36,831 votes were cast during the three-week tournament.

“This has been so much fun. It only works if other people participate and pay attention and have fun, so thank you to the 1,806 ‘students’ who participated,” said Scott Scarano, an accounting firm owner who founded Accounting High, a community for forward-thinking accountants.

He added that the tournament will return next year, with some tweaks to make it better.

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Tesla to Launch RoboTaxi on August 8

Published

7 months ago

April 12, 2024

Business Finance News

Dana Hull
Bloomberg News
(TNS)

Tesla Inc. plans to unveil its long-promised robotaxi later this year as the electric carmaker struggles with weak sales and competition from cheap Chinese EVs.

Chief Executive Officer Elon Musk posted Friday on X, his social media site, that Tesla’s robotaxi will be unveiled on Aug. 8.

Shares gained as much as 5.1% in postmarket trading in New York. Tesla’s stock has fallen 34% this year through Friday’s close. Shortly before Musk posted the news about the robotaxi, he lost the title of third-richest person in the works to Mark Zuckerberg, CEO of Meta Platforms Inc.

A fully autonomous vehicle, pitched to investors in 2019, has long been key to Tesla’s lofty valuation. In recent weeks, Tesla has rolled out the latest version of the driver-assistance software that it markets as FSD, or Full Self-Driving, to consumers.

The company has said that its next-generation vehicle platform will include both a cheaper car and a dedicated robotaxi. Though the company has teased both, it has yet to unveil prototypes of either. Musk’s Friday tweet indicates that the robotaxi is taking priority over the cheaper car, though both will be designed on the same platform.

Reuters reported earlier Friday that the carmaker had called off plans for the less-expensive vehicle and was shifting more resources toward trying to bring a robotaxi to market. Musk responded by saying “Reuters is lying,” without offering specifics.

Tesla also produced 46,561 more vehicles than it delivered in the first quarter, which has forced it to slash prices. U.S. consumers have been turning away from more expensive EVs in favor of hybrid models, causing many manufacturers to rethink pushes to electrify their fleets.

Splashy product announcements by Musk have always been a key part of Tesla’s ability to gin up enthusiasm among customers and investors without spending on traditional advertising. They don’t always work: the company unveiled the Cybertruck to enormous fanfare in November 2019, but production was delayed for years and the ramp up of that vehicle has been slow.

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(With assistance from Catherine Larkin.)

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Retail Sales and Wages Grew in March

Published

7 months ago

April 12, 2024

Business Finance News

Retail sales grew at a steady pace in March, according to the CNBC/NRF Retail Monitor, powered by Affinity Solutions, released today by the National Retail Federation.

“As inflation for goods levels off, March’s data demonstrates steady spending by value-focused consumers who continue to benefit from a strong labor market and real wage gains,” NRF President and CEO Matthew Shay said. “In this highly competitive market, retailers are having to keep prices as low as possible to meet the demand of consumers looking to stretch their family budgets.”

Total retail sales, excluding automobiles and gasoline, were up 0.36% seasonally adjusted month over month and up 2.72% unadjusted year over year in March, according to the Retail Monitor. That compared with increases of 0.4% month over month and 2.7% year over year in February, based on the first 28 days in February.

The Retail Monitor calculation of core retail sales – excluding restaurants in addition to automobiles and gasoline – was up 0.23% month over month and up 2.92% year over year in March. That compared with increases of 0.27% month over month and 2.99% year over year in February, based on the first 28 days in February.

For the first quarter, total retail sales were up 2.65% year over year and core sales were up 3.12%.

This is the sixth month that the Retail Monitor, which was launched in November, has provided data on monthly retail sales. Unlike survey-based numbers collected by the Census Bureau, the Retail Monitor uses actual, anonymized credit and debit card purchase data compiled by Affinity Solutions and does not need to be revised monthly or annually.

March sales were up in six out of nine retail categories on a yearly basis, led by online sales, sporting goods stores and health and personal care stores, and up in five categories on a monthly basis. Specifics from key sectors include:

Online and other non-store sales were up 2.48% month over month seasonally adjusted and up 15.47% year over year unadjusted.
Sporting goods, hobby, music and book stores were up 0.86% month over month seasonally adjusted and up 8.33% year over year unadjusted.
Health and personal care stores were up 0.03% month over month seasonally adjusted and up 4.5% year over year unadjusted.
Grocery and beverage stores were up 1.17% month over month and up 4.22% year over year unadjusted.
General merchandise stores were up 0.13% month over month seasonally adjusted and up 3.38% year over year unadjusted.
Clothing and accessories stores were down 0.01% month over month and up 2.13% year over year unadjusted.
Building and garden supply stores were down 2.13% month over month and down 3.97% year over year unadjusted.
Furniture and home furnishings stores were down 1.46% month over month seasonally adjusted and down 5.28% year over year unadjusted.
Electronics and appliance stores were down 2.27% month over month seasonally adjusted and down 5.92% year over year unadjusted.

To learn more, visit nrf.com/nrf/cnbc-retail-monitor.

As the leading authority and voice for the retail industry, NRF provides data on retail sales each month and also forecasts annual retail sales and spending for key periods such as the holiday season each year.