Not so Fussy; that’s a wrap; at sea, in the air and on the road; and other highlights of recent tax cases.

Rochester, New York: Business owner Scott Reeves, of Victor, New York, has pleaded guilty to tax evasion.

Reeves owns Fussy Contracting Inc., a.k.a. Mr. Fussy, a roofing business that operated out of Rochester during tax years 2017 through 2022. After providing roofing services to residential and commercial customers, Fussy was paid primarily with checks that Reeves deposited to bank accounts and cashed at a local check casher.

For 2017 through 2022, Reeves failed to file his individual income tax returns, as well as the returns for the corporation, which resulted in no taxes being paid on the profits; he failed to report gross receipts totaling $5,398,008.27. After paying material expenses, labor expenses and check cashing fees, he kept the remaining $1,538,215, resulting in a tax loss of $248,394 to the IRS.

Sentencing is March 3. The charge carries a maximum of five years in prison and a $250,000 fine.

Medford, Oregon: Steven Shirley has been sentenced to two years in prison and five years of supervised release for illegally producing marijuana and filing false returns with the IRS.

Beginning in 2012, Shirley began purchasing properties in Cave Junction, Oregon, as president and minister of Earth Peoples Park, a religious nonprofit. Shirley leased the land to third parties and used profits from the lease to purchase additional properties. By 2019, Shirley, through Earth Peoples, owned or co-owned 21 properties in Josephine County, Oregon, and received at least $400,000 a year through leases.

In September 2019, investigators from the Josephine Marijuana Enforcement Team identified 16 of the properties as having large, unlicensed marijuana operations. Law enforcement later seized more than 15,000 marijuana plants and nine firearms and determined that a portion of Bureau of Land Management lands were used for these operations.

Investigators learned Shirley not only employed and directed staff to illegally grow and harvest marijuana, but he also sold and delivered the marijuana. In 2021, agents executed search warrants on 11 Earth Peoples properties and discovered Shirley continued to illegally manufacture and sell marijuana; agents also seized additional firearms.

IRS agents also reviewed the religious organization’s tax-exempt status and Shirley’s personal tax records from 2015 to 2018. They determined that Earth Peoples did not qualify as a religious organization and that Shirley used it as a for-profit land-management company. Agents also learned that Shirley intentionally underreported lease income by more than $1 million, resulting in more than $290,000 in unpaid taxes.

Shirley, who pleaded guilty in March, was also ordered to pay $290,291 in restitution to the IRS and $12,896 in restitution to the Bureau of Land Management.

Cedar Hills, Utah: Former resident and film company owner Paul Kenneth Cromar has been sentenced to six years in prison for tax evasion and for forcibly retaking property that had been seized to pay outstanding tax debt.

He owned a home in Cedar Hills and operated Blue Moon Productions, a freelance film and media production company. From 1999 through 2005, he filed no federal income tax returns and paid no tax. In 2005, the IRS audited and assessed him $703,266.96 in taxes, interest and penalties.

For more than a decade after, Cromar made no payments towards his debt and instead took steps to obstruct the IRS collection of his taxes. In 2019, a judge ordered that Cromar’s home be sold at auction to satisfy his tax obligations, which by then had ballooned to over $1 million.

Cromar filed false documents on the property’s title and with the IRS, including a false promissory note, and tried to intimidate potential buyers of the home and harassed IRS personnel by filing frivolous personal lawsuits. Shortly before the sale closed, Cromar broke into the home and attempted to reclaim it. With the help of others, he occupied the home unlawfully for five months, fortifying it with firearms, sandbags and wooden boards.

Cromar, who was previously convicted, was also ordered to serve three years of supervised release and to pay some $723,028.65 in restitution to the United States.

Stuart, Florida: Businessman Matthew Brown has pleaded guilty to not paying employment taxes withheld from his employees’ pay, and to filing a false return.

Brown owned and operated area businesses including Elite Payroll, which provided services including withholding Social Security, Medicare and federal income taxes from the wages of clients’ employees and then paying over those funds to the IRS. 

Between 2014 and 2022, Brown did not pay more than $20 million in taxes withheld from clients of Elite Payroll and from other businesses he controlled. He charged his clients the full amount of their tax liabilities, filed federal returns substantially underreporting those liabilities and pocketed the difference, buying real estate, including his multimillion-dollar home, and such luxury items as a yacht, an aircraft and high-end cars.

The federal tax loss exceeded $22 million. Brown faces up to five years in prison, a period of supervised release, restitution and monetary penalties. 

Verona, Virginia: Former business owner Richard E. Moore has pleaded guilty to not accounting for and paying employment taxes to the IRS.

Moore was executive vice president and part owner of Nexus Services, which offered bond securitization and other services to immigrants detained by U.S. Immigration and Customs Enforcement. Moore was responsible for withholding taxes from Nexus employees’ wages and paying the money over to the IRS and for filing quarterly employment tax returns.

For many quarters between 2015 and 2024, he withheld the funds but did not pay them over to the IRS and did not file the returns, causing a federal tax loss of some $3.1 million.

He faces a maximum of five years in prison for each count of failing to pay employment taxes, as well as a period of supervised release, restitution and monetary penalties. 

San Antonio: Business owner Belinda Jo Juarez, of Boerne, Texas, has been sentenced to three years in prison for embezzling employee insurance premiums and for tax evasion.

Juarez was the majority owner and CEO of Superior Home Health Service, a health care company that offered employees the option to enroll in an employee health insurance plan. Beginning around August 2017, Juarez knowingly caused her company to stop remitting insurance payments to the providers but continued to withhold contributions from employee paychecks, even after insurance providers canceled their contracts as the result of non-payment. The employees, some of whom had incurred medical bills, were not informed that their insurance coverage had been cancelled or was inactive.

As part of the sentence, Juarez was ordered to pay $617,738.65 in restitution to former employees for improperly withheld premiums and resultant medical debts.

Juarez was also sentenced on one count of willful failure to collect or pay over tax for withholding federal payroll tax contributions from her employees’ paychecks and failing to remit the funds to the IRS for periods between 2016 and 2019. The sentence accounted for more than $1 million in personal income tax liability.

In total, Juarez was sentenced to pay $3,667,098.88 in restitution to the IRS. She was also fined $20,000 and will serve three years of supervised release.

The Massachusetts Society of CPAs released a report Thursday on key trends and concerns in the accounting profession drawn from a recent survey.

Based on a survey of more than 200 firm leaders at MassCPAs’ New England Practice Management Conference last November, the findings point to some of the critical challenges and emerging opportunities in the areas of talent, technology, organizational structures and growth in advisory services.

The survey found that talent challenges remain a high priority, with 61% of respondents identifying recruiting talent as their top concern, followed by 39% focused on retention. Developing next-generation leaders (29%) and succession planning (24%) also ranked as pressing priorities.

Technology is also a key challenge. Moderate digital adoption is the norm for 62% of firms, with 18% achieving high adoption with extensive use of automation and data analytics. Investment priorities include cloud-based solutions (62%), automation for routine processes (54%) and client-facing portals (46%). 

Succession planning (24%) and cost management (19%) are driving reevaluations of traditional firm models, with merger and acquisition activity and private equity playing significant roles. 

Tax strategy and planning (69%) are leading the way in growth opportunities, with many firms increasingly shifting to advisory services like fractional CFO and business advisory (31%), fractional accounting (16%) and nontraditional services like ESG reporting. Traditional areas such as tax compliance (19%) and financial statement audits (17%) remain vital core services.

“These findings underscore a critical need for accounting firms to proactively address workforce challenges while embracing technological advancements and diversifying services,” said MassCPAs president and CEO Zach Donah in a statement. “At MassCPAs, we remain committed to equipping our members with the tools and resources they need to thrive in this transformative era for our profession.” 

The report can be downloaded at masscpas.org/firminsights25. 

One of the best wedding gifts is a scanner, according to financial advisor Ekaterina Klimentova.

To explain why, the partner in the New York office of registered investment advisory firm Cerity Partners who is a certified public accountant as well as a certified divorce financial analyst shared the story of two clients’ divorces. One had shred all documents that were at least 10 years old. The other kept all of them, dating back 22 years or more.

“I unfortunately have had situations where records would really make a huge difference,” Klimentova said. “The person was a real hoarder and that really paid well for them. … The better you’re educated, the better you’re informed and the better records you have, you will always come out ahead.”

READ MORE: Divorce planning for clients: A guide for financial advisors

While lawyers play the lead role in representing divorcées during the legal agreement process, advisors and tax professionals must prepare their clients for the possibility of a divorce and guide them through the financial complexities of completing the formal separation of a marriage. 

Multifaceted and evolving family dynamics and technical tasks in the tax reckoning for prior estate-planning strategies such as increasingly popular spousal lifetime access trusts demand careful attention through a highly stressful time in clients’ lives. The IRS may compare the first return after the divorce to those from as long as three years earlier, according to Klimentova.

“It really becomes important not only to know what’s on it, but what your potential liability may be and how do you account for that in your divorce agreement?” she said. “There’s plenty of work for a tax professional or a financial advisor to do in a situation like that.”

Emotionally and financially taxing questions

Guides compiled by the IRS, advisor matchmaking and lead generation service SmartAsset and tax software firms H&R Block and TurboTax cover key questions about tax filing status, the filing of amended returns if the marriage is annulled (or treated as if it never happened), the need to file under the name registered with the Social Security Administration or change it and the handling of possible transfers of property or individual retirement account assets. Each employed spouse must tweak their tax withholding by filling out a new Form W-4. 

And the Tax Cuts and Jobs Act altered the tax treatment of alimony payments for divorces finalized in 2019 or later, so that financial support paid by one ex-spouse to another is no longer deductible to the one sending the money nor included in the taxable income of the one getting the dollars. In addition, the law ruled out any possible deductions for legal fees.

Some of the most difficult issues revolve around a couple’s children, whether in terms of how advisors’ emotional and behavioral roles in their clients’ lives may spill into psychology or in the complicated tax requirements connected to those topics.

READ MORE: Gray divorce can derail retirement. Here’s how advisors can help 

Child support payments are neither deductible or counted as income to the recipients, but only one spouse may claim a kid as a dependent — even if the custody is split 50-50. The spouse claiming the child as a dependent becomes the “custodial” parent and gets eligibility for the earned income tax credit and the child and dependent care tax credit. However, the non-custodial parent could get the child tax credit and additional child tax credit by filing Form 8332, which requires the signature of the custodial spouse.

“Generally, the parent with custody of a child can claim that child on their tax return to file as head of household or claim credits,” according to the IRS guidance on divorces and separations. “We might audit your return and ask for information to verify your claimed dependents and credits.”

From a technical perspective that also ties into the emotional side of money and wealth, even tougher topics could come up with the transition of assets. They could revolve around the treatment of capital gains, a qualified domestic relations order relating to alternate payees for retirement-plan benefits, possible gift-tax implications governing the timing of property transfers, so-called carryforwards and carrybacks and specific quandaries relating to family businesses, according to a 2022 guide to the key tax questions in divorces in the journal of the Association of International Certified Public Accountants, “The Tax Adviser,” by Amy Kinkaid and Charles Federanich of Pease Bell CPAs.

“Navigating a divorce can be an emotional experience for clients, and assisting them can likewise be poignant for their tax advisers, particularly when the adviser has a long-established relationship with both spouses,” Kinkaid and Federanich wrote. “Once a client notifies you they are contemplating a divorce and any potential conflict-of-interest matters are resolved, it is important to swiftly meet and address tax planning issues. It is imperative to collaborate with the divorce attorneys and investment advisors so that the time frame to plan and structure optimal tax outcomes for the parties is addressed and deadlines are met.”

READ MORE: Meet the CDFA, a certification for advisors with clients facing divorce

Start with the basics

Even though advisors may have been working with both spouses for many years, the conflicts involved with counseling them throughout the divorce on “very different” goals during the separation are so substantial that “it’s probably best for each of the parties to have their own advisors to get independent advice,” Klimentova said.

The financial ramifications of any possible separation in the future necessitate frequent and careful scrutiny of any prenuptial agreements. In fact, advisors should add them to the list of documents to request from incoming clients, Klimentova noted. Shaking off the dust from an agreement that may be decades-old can often prove a costly endeavor, and what sounded like an appropriate amount of spousal support to retain the same standard of living 20 years ago may not pay for a single credit card bill today, she said.

“Like any financial plan, it has to be a living, breathing thing. It’s never static,” Klimentova said. “By paying attention to these things, you could really help your clients out. The more you look, the more questions you ask, the better you’re off.”

READ MORE: Prenups protect more than clients’ money, divorce lawyers say

In that vein, tax advantages for spousal lifetime access trusts may have caused clients eager to get the savings to ignore how divorce represents a very real risk to the estate strategy. The separation would entail a careful accounting of the trust assets, Klimentova said.

“You’re basically giving up control of the asset,” she said. “This still can be evaluated and the attorneys really have to look at the situation, what was the intent, to see if there’s a possibility that these assets can be replaced by something else in the marital estate.”

At a basic level, while no advisor, tax pro or spouse can predict the future, they can perform the essential work of ensuring that both members of the couple take the time to educate themselves about their family’s finances. All too frequently, partners will say something along the lines of “‘Oh, my spouse handles the tax returns,'” according to Klimentova.

“It’s very important for any advisor to make sure to tell their clients to always, always pay attention to what is on your tax return,” she said. “The fact that you did not want to look at your return does not make you not liable for the potential tax penalties.”