Accounting
Tax Fraud Blotter: Job woes
Heavy metal; with a side of alimony; Landing in jail; and other highlights of recent tax cases.
Quincy, Massachusetts: Business owner Su Nguyen, 60, has been sentenced to 18 months in prison to be followed by a year of supervised release for filing false corporate tax returns to hide corporate revenue and to evade more than $2 million in taxes.
Between 2016 and 2020, Nguyen owned and operated General Employment Services, a temporary employment agency. Clients paid General by check for the work by employees. Nguyen deposited a small number of client checks in a bank account that he used for business and reported that income to the IRS. Nguyen cashed most of the checks at a local check casher and used that cash on himself and to pay employees’ wages off the books.
In total, Nguyen cashed more than $10 million in client checks and did not report to the IRS that revenue or the cash wages.
Nguyen, who pleaded guilty in May, was also ordered to pay $2,090,192.77 in restitution.
Jacksonville, Florida: Pablo Isila Euceda-Hernandez, a Honduran national in the United States illegally, has been sentenced to 27 months in prison for conspiracy to commit wire fraud and conspiracy to commit tax fraud.
Euceda-Hernandez established a shell company that purported to be involved in the construction industry, obtaining a workers’ compensation insurance policy in the name of the company to cover a minimal payroll for a few purported employees. He then rented the workers’ compensation insurance to work crews who had obtained subcontracts on projects in Florida as well as contractors in other states.
He sent contractors a certificate as “proof” that the work crews had workers’ compensation insurance. The scheme also facilitated the avoidance of the higher cost of obtaining adequate workers’ compensation insurance for the workers on the crews to whom Euceda-Hernandez rented the workers’ comp insurance.
As part of the scheme, the contractors issued payroll checks for the workers’ wages to the shell companies and Euceda-Hernandez cashed these checks, then distributed the cash to the work crews after deducting their fee, which was typically about 6% of the payroll. He cashed payroll checks totaling some $5 million. Neither the shell company nor the contractors reported to government authorities the wages that were paid to the workers, nor did they pay either the employees’ or the employer’s portion of payroll taxes.
According to the IRS, the amount of payroll taxes due on wages collected by Euceda-Hernandez totaled $1,214,508.
The court also ordered Euceda-Hernandez to pay $1,214,508 in restitution to the IRS and the court entered a money judgment against him for $336,029, the proceeds of the wire fraud.
Rutland, Vermont: Business owner James Mailhiot Jr. has pleaded guilty to federal income tax evasion.
Mailhiot owned and operated a roofing business that generated some $1.6 million in gross revenues between 2019 and 2022. He used an out-of-state accountant to prepare his federal returns and sent the accountant records of revenues and expenses from roofing jobs that year.
The records Mailhiot gave to the accountant were incomplete, resulting in a substantial understatement of his annual taxable income and substantial underpayments of the taxes he owed to the IRS.
Mailhiot’s underpayments for 2019 to 2022 totaled $296,000.
Sentencing is March 27. He faces up to five years in prison and a fine of up to $100,000.
Santa Clara, California: Exec John Comeau has pleaded guilty to not paying federal employment taxes.
Comeau was CEO of Vivid Inc., which provided metal coating services across various industries. From at least the first quarter of 2010 through the end of 2019, Vivid withheld Social Security, Medicare and income taxes from the wages paid to its employees but did not report or pay the money to the IRS.
In total, he caused a tax loss of some $1,150,000.
Sentencing is April 30. He faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Dorchester, Massachusetts: Business owner Det Tran, 62, has been sentenced to a year and a day in prison, to be followed by three years of supervised release, for a multiyear tax fraud in which he failed to pay employment taxes for his temporary employment agency.
He owned and operated HTP Temp. Inc., which provided temporary workers for client businesses. Tran paid $8 million in off-the-books cash wages to HTP employees, and, through his concealment of these cash wages, caused his accountant to prepare false federal quarterly filings for employee wages and tax withholdings between 2018 and 2021. Tran evaded more than $2.1 million in employment taxes owed to the IRS.
Tran, who pleaded guilty in September, was also ordered to pay more than $2.5 million in restitution.
Sacramento, California: Richard Jason Mountford, formerly of Monterey County, California, and now of Las Vegas, has been sentenced to 27 months in prison for conspiring to file false claims against the United States.
From 2016 to 2020, Mountford conspired with another person to submit false individual income tax returns seeking undeserved refunds. Mountford and his co-conspirator filed false income tax returns in their own names, as well as in the names of two other unwitting individuals, that falsely reported they’d received wages — from a bogus employer — from which taxes had been withheld. Most of the returns also falsely reported alimony payments to inflate the refunds.
Mountford and his co-conspirator received $873,723.53 from the IRS. Mountford deposited $757,075.53 of those funds into his own bank accounts and subsequently purchased nearly $360,000 worth of new cars. Mountford also distributed about $170,000 in cash and gold bars to his co-conspirator.
In addition to his prison sentence, Judge Nunley ordered Mountford to serve a year of supervised release and to pay $757,075.53 in restitution to the U.S.
Panacea, Florida: Real estate agent Sedita Charles Cayson, 59, has been found guilty of willfully failing to file his income tax returns for five years.
Cayson, known as the “Land Man,” was a serial non-filer with a history of delinquencies with the IRS; he was assessed liens for 2004 to 2007 and 2011 to 2013. Despite earning real estate sales commissions averaging more than $150,000 per year, he also failed to file income tax returns for 2017 to 2021.
Beginning in 2017, Cayson instructed his real estate broker to split his commission checks into amounts that were less than $10,000, most of which Cayson cashed at a bank immediately.
Sentencing is Feb. 24. He faces up to a year in federal prison and a $25,000 fine for each count, followed by up to a year of supervised release.
The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all
- H.R. 1152, the Electronic Filing and Payment Fairness Act, sponsored by Rep. Darin LaHood, R-Illinois, Suzan Delbene, D-Washington, Randy Feenstra, R-Iowa, Brad Schneider, D-Illinois, Brian Fitzpatrick, R-Pennsylvania and Jimmy Panetta, D-California. The bill would apply the “mailbox rule” to electronically submitted tax returns and payments to allow the IRS to record payments and documents submitted to the IRS electronically on the day the payments or documents are submitted instead of when they are received or reviewed at a later date. The AICPA believes this would offer clarity and simplification to the payment and document submission process while protecting taxpayers from undue penalties.
- H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act, sponsored by Rep. Randy Feenstra, R-Iowa, and Brad Schneider, D-Illinois, which would require notices describing a mathematical or clerical error to be made in plain language, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person, among other provisions.
- H.R. 517, the Filing Relief for Natural Disasters Act, sponsored by Rep. David Kustoff, R-Tennessee, and Judy Chu, D-California. The process of receiving tax relief from the IRS following a natural disaster typically must follow a federal disaster declaration, which can often come weeks after a state disaster declaration. The bill would provide the IRS with authority to grant tax relief once the governor of a state declares either a disaster or a state of emergency and expand the mandatory federal filing extension under Section 7508(d) of the Tax Code from 60 days to 120 days, providing taxpayers with more time to file tax returns after a disaster.
- H.R. 1491, the Disaster related Extension of Deadlines Act, sponsored by Rep. Gregory Murphy, R-North Carolina, and Jimmy Panetta, D-California, would extend the amount of time disaster victims would have to file for a tax refund or credit (i.e., the lookback period) by the amount of time afforded pursuant to a disaster relief postponement period for taxpayers affected by major disasters. This legislative solution would place taxpayers on equal footing as taxpayers not impacted by major disasters and would afford greater clarity and certainty to taxpayers and tax practitioners regarding this lookback period.
“The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience,” said Melanie Lauridsen, vice president of tax policy and advocacy for the AICPA, in a statement Tuesday. “We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we’re encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.”
The bills were also included in a recent Senate
The House also passed two other tax-related bills Tuesday that weren’t endorsed in the recent AICPA letter.
- H.R. 1155, Recovery of Stolen Checks Act, sponsored by Rep. Nicole Malliotakis, R-New York, would require the IRS to create a process for taxpayers to request a replacement via direct deposit for a stolen paper check. If a check is determined to be stolen or lost, and not cashed, a taxpayer will receive a replacement check once the original check is cancelled, but many taxpayers are having their replacement checks stolen as well. Taxpayers who have a check stolen are then unable to request that the replacement check be sent via direct deposit. The bill would require the Treasury to establish processes and procedures under which taxpayers, who are otherwise eligible to receive an amount by paper check in replacement of a lost or stolen paper check, may elect to receive such amount by direct deposit.
- H.R. 997, National Taxpayer Advocate Enhancement Act, sponsored by Rep. Randy Feenstra, R-Iowa, would prevent IRS interference with National Taxpayer Advocate personnel by granting the NTA responsibility for its attorneys. In advocating for taxpayer rights, the National Taxpayer Advocate often requires independent legal advice. But currently, the staff members hired by the National Taxpayer Advocate are accountable to internal IRS counsel, not the Taxpayer Advocate, creating a potential conflict of interest to the detriment of taxpayers. The bill would authorize the National Taxpayer Advocate to hire attorneys who report directly to her, helping establish independence from the IRS.
House Ways and Means Committee Chairman Jason Smith, R-Missouri, applauded the bipartisan House passage of the various bills, which had been unanimously passed by the committee.
“President Trump was elected on the promise of finally making the government work better for working people,” Smith said in a statement Tuesday. “This bipartisan legislation helps fulfill that mandate and makes improvements to tax administration that will make it easier for the American people to file their taxes. Those who are rebuilding after a natural disaster particularly need help filing taxes, which is why this set of bills lightens the load for taxpayers in communities struck by a hurricane, tornado or some other disaster. With Tax Day just a few days away, we must look for common-sense, bipartisan ways to make filing taxes less of a hassle.”
By streamlining tasks such as risk assessment, control testing, and reporting, gen AI has the potential to increase efficiency across the entire SOX lifecycle.
House passes tax administration bills
Trump tariffs’ effect on consumer prices debated by economists
In the blogs: Many hats
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Economics5 days agoPCE inflation February 2025:
-
Personal Finance7 days agoStudent loans could be managed by the Small Business Administration
-
Economics6 days agoWhite House denials over the Signal snafu ring hollow
-
Economics5 days agoYoung Americans are losing confidence in economy, and it shows online
-
Accounting4 days agoIRS sets new initiative with banks to uncover fraud
-
Personal Finance6 days agoMillions of student loan borrowers past-due after bills restarted: Fed
-
Economics5 days agoConsumer sentiment worsens as inflation fears grow, University of Michigan survey shows
-
Personal Finance1 week agoTreasury scraps reporting rule for U.S. small business owners