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Tax Fraud Blotter: In the gutter

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Host of problems; comp it; plan to fail; and other highlights of recent tax cases.

Portland, Maine: Colleen Holt-Thompson, of Kentucky, has been sentenced to three years of probation and ordered to pay $172,158.79 in restitution for conspiracy to commit visa fraud and for tax evasion.

Holt-Thompson founded Host Ukraine in 2015 in Newport, Kentucky, and served as the nonprofit’s executive director. The organization brought children living in orphanages in Ukraine to stay with American families for short periods over the summer or winter holidays. Host Ukraine was required to have the permission of the Ministry of Social Policy in Ukraine to transport each child, and the name and address of a hosting family was required before permission would be granted. Once permission was granted, the U.S. embassy in Kyiv, Ukraine, would issue a non-immigrant visa to the child. Between 2015 and 2019, Thompson applied for and received ministry hosting permission for 828 U.S. non-immigrant visas for Ukrainian children.

To obtain the visas, Holt-Thompson provided placeholder names — names and addresses of American families who had not actually agreed to serve as hosts — when she submitted names of Ukrainian children to the Ministry. Before the children traveled to the U.S., she would find actual host families for each child. During the period of the conspiracy, a conspirator who lived in Maine and was the Northeast contact for Host Ukraine was responsible for identifying placeholder families in Maine and recruiting families to serve as host families for the Ukrainian children who traveled to the U.S. on fraudulently obtained visas. Host families were charged a $3,000 fee to host a child; Host Ukraine collected donations.

In 2016, Holt-Thompson spent some $127,610 in personal expenses and paid for those expenses from Host Ukraine’s checking account or paid personal credit card bills using that checking account.

Money spent on personal expenses was not reported as income on the return that Holt-Thompson and her husband filed; she reported her taxable income for that year as only $47,226. She also failed to file a return for Host Ukraine.

Buffalo, New York: Workers’ comp claim handler Maureen Holleran has pleaded guilty to filing a false return.

Between September 2015 and October 2023, Holleran worked remotely as a workers’ comp handler for an insurance company in Canada. She evaluated and paid workers’ comp claims for policies issued by the company. Holleran had authority to send payments to a claimant of up to $2,000 without further approval by her supervisor. Between July 2020 and June 2023, Holleran submitted more than 1,200 fraudulent claims in the insurance company’s processing system, each claim below the $2,000 threshold. Claims were paid into bank accounts controlled by Holleran. She created fictitious expenses, such as claims for lost wages and reimbursements for medical supplies and copays, to justify the fraudulent payments.

She submitted some $2.37 million in fraudulent claims, creating fictitious email accounts that appeared to be associated with the policy claimant, then used these email addresses to sign up for the insurance company’s client portal. She then input her own banking information into the portal.

For 2020 through 2022, Holleran embezzled some $1,592,095 from the company that she failed to report on her income tax returns for those years. The IRS estimates that the tax for these tax years is $545,792.

Sentencing is Nov. 4. The charge carries a maximum of three years in prison and a fine of $250,000.

Jackson, Mississippi: A U.S. District Court has entered permanent injunctions against Thomas Walt Dallas, Jason Todd Mardis and Capital Preservation Services to bar them from making statements about tax benefits for compensation, among other relief. The defendants consented to the injunctions.

According to the complaint, Dallas, Mardis and Capital Preservation Services marketed a tax scheme at numerous professional conferences and media appearances, targeting medical professionals and small-business owners. They allegedly falsely claimed that customers following “Tax Plans” could claim multiple deductions to which they were in fact not entitled. This included claims that customers’ businesses could deduct large, unnecessary “marketing fees” to marketing companies; that those companies could employ family members and deduct family meals, vehicle expenses and tuition, among other items; and that customers could “rent” homes to businesses short-term at exorbitant rates and avoid taxes on the rental income.

The alleged harm from the scheme could be as much as $130 million in tax revenue since 2014.

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Lewisville, Texas: Bookkeeper Barbara Chalmers has been sentenced to 10 years in prison, to be followed by three years of supervised release, for a scheme to embezzle at least $29 million from her employer, a charitable foundation and other companies run by a Dallas family. 

She admitted that starting in at least 2012 she used her position as bookkeeper for the family’s companies and her signatory authority over bank accounts to write herself at least 175 checks that she deposited into her personal accounts. She also provided false paperwork to tax preparers that misstated year-end cash-on-hand for the accounts from which she was embezzling.

Chalmers used more than $25 million of the stolen money to fund a construction business; she used $6 million to pay off credit card debt.

She was also ordered to pay $44,809,438 in restitution to her victims.

Rochester, New York: Business owner Jeffrey Tome, 62, has pleaded guilty to filing a false return.

Tome owns Tome Enterprises Inc., which provides gutter repair and installation services. For 2017 through 2021, he failed to deposit 1,679 customer checks totaling $1,719,283.45 into the business bank account, instead cashing the checks at a local check-cashing business.

Tome then intentionally failed to advise the business’ tax preparer of the money received from cashing the business checks, resulting in the $1,719,283.45 not being reported on the corporate income tax returns.

He failed to include the net profits from the corporation as income on his personal federal income tax returns, resulting in his failing to pay personal income taxes of $330,137. He also paid his employees $407,573.60 in cash, which represented wages for which payroll taxes should have been paid. The payroll taxes that Tome failed to pay totaled $62,358.76.

Sentencing is Dec. 11. Tome faces up to three years in prison and a fine of $250,000.

New York: Business owner Nicholas Arcuri, of Staten Island, has pleaded guilty to failing to collect and pay over employment taxes from his company’s employees.

Between 2015 and 2021, Arcuri, owner and president of Capri Upholstery Custom Furnishing, paid some $2.6 million in off-the-books cash to employees, from which he did not withhold Social Security, Medicare or income taxes or pay over those taxes to the IRS. Arcuri also concealed the cash payroll from his return preparer. 

In total, Arcuri caused a tax loss to the IRS of $486,753.

Sentencing is Jan. 23. He faces up to five years in prison as well as a period of supervised release, restitution and monetary penalties. 

Sunrise, Florida: Resident Yolanda Dewar has pleaded guilty to filing false federal returns to fraudulently obtain refunds. 

Between 2018 and 2020, she created a trust and filed four false returns on behalf of the trust for nearly $2 million in refunds. Dewar continued filing such returns even after the IRS notified her that her claims were frivolous and had no basis in law. Nevertheless, the IRS issued nearly $500,000 to the trust in response to Dewar’s false claims. 

Dewar allegedly used a portion of those refunds to purchase a car for a family member, get plastic surgery and renovate her home.

Sentencing is Oct. 24. She faces up to three years in prison, a period of supervised release, restitution and monetary penalties.

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House passes tax administration bills

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The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all endorsed this week by the American Institute of CPAs, and passed two others as well.

  • 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 discussion draft aimed at improving tax administration at the IRS that are strongly supported by the AICPA.

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.”

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Accounting

In the blogs: Many hats

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Teaching fraud; easement settlement offers; new blog on the block; and other highlights from our favorite tax bloggers.

Many hats

  • Taxbuzz (https://www.taxbuzz.com/blog): There’s sure an “I” in this “teamwork:” What to know about potential IRS and ICE collaboration.
  • Tax Vox (https://www.taxpolicycenter.org/taxvox): How IRS data would likely be unhelpful validating SNAP eligibility.
  • Yeo & Yeo (https://www.yeoandyeo.com/resources): How financial benchmarking (including involving taxes) can help business clients see trends, pinpoint areas for improvement and forecast future performance.
  • Integritas3 (https://www.integritas3.com/blog): One way to take a bite out of crime, according to this instructor blogger: Teach grad students how to detect, investigate and prevent financial fraud.
  • HBK (https://hbkcpa.com/insights/): Verifying income, fairly distributing property, digging the soon-to-be-ex’s assets out of the back of the dark, dark closet: How forensic accounting has emerged as a crucial element in divorces.

Standing out

Genuine intelligence

  • AICPA & CIMA Insights (https://www.aicpa-cima.com/blog): How artificial intelligence and other tech is “Reshaping Finance,” according to this podcast. Didem Un Ates, CEO of a U.K.-based company offering AI advisory services, tackles the topic.
  • Taxjar (https:/www.taxjar.com/resources/blog): How AI and automation can help even the knottiest sales tax obligations and problems.
  • Dean Dorton (https://deandorton.com/insights/): Favorite opening of the week: “The madness doesn’t just happen on college basketball courts — it also happens when your finance team is stuck using a legacy on-premises accounting system.”
  • Canopy (https://www.getcanopy.com/blog): Top client portals for accounting firms in 2025.
  • Mauled Again (https://mauledagain.blogspot.com/): Despite what Facebook claims, dependents have to be human.

New to us

  • Berkowitz Pollack Brant (https://www.bpbcpa.com/articles-press-releases/): This Florida firm offers a variety of services to many industries and has a good, wide-ranging blog. Recent topics include the BE-10, nexus and state and local tax obligations, IRS cuts and what to know about the possible bonus depreciation phase out. Welcome!

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Accounting

Is gen AI really a SOX gamechanger?

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By streamlining tasks such as risk assessment, control testing, and reporting, gen AI has the potential to increase efficiency across the entire SOX lifecycle.

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