Connect with us

Accounting

Tax Fraud Blotter: Beat this

Published

on

Let me pay that; W-2-timer; the early bird gets a cell; and other highlights of recent tax cases.

Kansas City, Missouri: Anthony M. Alford, 46, has been charged with making a hoax call that led to an IRS employee being detained and a local IRS office being locked down.

The federal criminal complaint alleges that Alford placed a call to emergency services, falsely claiming that an individual was armed and was threatening to shoot people in an IRS building. According to an affidavit filed in support of the complaint, Alford called 911 on Sept. 10, 2024, and reported that a person identified in court documents as “Victim One” had a gun and was threatening to shoot up the IRS building at 333 W. Pershing Road in Kansas City. The victim is an IRS employee.

Police were dispatched to the building, where they contacted IRS security and federal officers. The victim had been detained and searched for weapons based on the 911 call. Following the call, a wing of the IRS building was locked down and the IRS announced that there was an active shooter in the building.

The victim, who was unarmed, told investigators she had been dating Alford for about a month and was trying to break up with him. Alford had never been violent, she said, but had exhibited controlling, possessive and jealous behavior. Alford had repeatedly called and messaged her the previous night, she said, and earlier that morning sent her messages threatening to involve the police.

Investigators interviewed Alford afterward and he told them the victim did not threaten to shoot up the IRS Building, as he had said in the 911 call. His stated intention was to instigate trouble for the victim at work.

Alford remains in custody pending a detention hearing on Oct. 4.

Rolling Meadows, Illinois: Tax preparer Adam R. Oliva has admitted that he stole more than $1.1 million from more than 10 clients under the pretense that the money would be sent to the IRS and state revenue authorities to satisfy tax liabilities.

Oliva held himself out as a tax professional who did business under various names, including Oliva and Associates LLC and The Oliva Group LLC. Oliva admitted in a plea agreement that from 2015 to 2020, he fraudulently induced the clients to provide him with money for the purported purpose of paying their income taxes. Oliva instead kept the money for himself.

Oliva also admitted that he filed false returns on behalf of some of the clients, reflecting no or lower tax liabilities to make it less likely that the IRS would contact the clients about their unpaid tax liabilities.

Earlier this year, Oliva pleaded guilty in a separate fraud case for duping investors who had provided him with money to fund purported short-term loans to clients. Oliva promised the investors that they would receive returns of 10% to 20% on their investments when Oliva actually never intended to make any short-term loans. Instead, he pocketed the investors’ money and used it for personal expenses, including gambling, restaurants and retail purchases. Oliva faces up to 20 years in prison in this case when sentenced on Oct. 18.

He pleaded guilty to one count of wire fraud and one count of preparing a false return. The wire fraud count is punishable by up to 20 years in prison; the tax count carries a maximum of three years. Sentencing is Jan. 24.

Hands-in-jail-Blotter

Palm Springs, California: Resident William Mandel Musgrow has pleaded guilty to scheming to defraud the IRS out of more than $2.1 million via the issuing of fake W-2s and to fraudulently obtaining nearly $1 million of COVID-19 economic relief loans.

Musgrow used one of his business entities to issue fraudulent W-2s that represented to the IRS that the recipients were employed by his various businesses, received wages and had federal tax withheld from their paychecks, when, in fact, the W-2s either overstated the recipient’s income or were wholly fraudulent as the recipient either did not work for the business at all or had no federal income tax withheld from paychecks. Musgrow then would help the recipient file fraudulent federal income tax returns that utilized the bogus W-2s to generate an undeserved refund.

In total, Musgrow issued at least 87 fraudulent W-2s and assisted in the filing of at least 87 false income tax returns. These returns requested a total of $2,769,600 in refunds, and the IRS paid out $2,136,630.

From March to August 2020, Musgrow also submitted 14 fraudulent applications to the U.S. Small Business Association and banks for Paycheck Protection Program loans and Economic Injury Disaster Loans. In these applications, Musgrow lied about the number of employees to whom were paid wages, falsely certifying that the loan proceeds would be used for permissible business purposes, and, in some cases, that the businesses were legitimate, when in fact they were not operating in any fashion and had no employees.

Musgrow submitted a total of 14 fraudulent loan applications that requested more than $1.9 million. The SBA and lenders approved and funded many of the loans; Musgrow obtained some $970,000 in fraudulent proceeds.

Sentencing is Jan. 16. Musgrow will face up to 20 years in prison for wire fraud and three years for the tax fraud.

Austin, Texas: Resident Frank Richard Ahlgren III has pleaded guilty to filing a return that falsely underreported the capital gains he earned from selling $3.7 million in bitcoin. 

Between 2017 and 2019, he filed returns that underreported or did not report the sale of $4 million worth of bitcoin in which he had substantial gains. Ahlgren was an early investor in bitcoin: In 2015, he bought some 1,366 bitcoin when the virtual currency was valued at no more than $500 each. In October 2017, Ahlgren sold some 640 bitcoin for $3.7 million.

He then filed a federal return for 2017 that substantially inflated the cost basis of the bitcoin, underreporting his capital gain. In 2018 and 2019, Ahlgren also sold more than $650,000 worth of bitcoin and did not report those sales on either year’s return. 

He caused a federal tax loss exceeding $550,000.

Ahlgren faces up to three years in prison as well as a period of supervised release, restitution and monetary penalties.

Albuquerque, New Mexico: David Wellington has been sentenced to 40 months in prison for devising and operating a tax evasion scheme, and has been ordered to pay more than $5.5 million in restitution.

In January 2005, Wellington and Stacy Underwood founded National Business Services in New Mexico, specializing in creating LLCs for clients seeking to “beat the IRS” by evading taxes. Wellington focused on marketing and client development; Underwood managed corporate filings and bank accounts. The company obtained EINs for clients and opened bank accounts under Underwood’s signature authority.

From 2005 to 2015, they created 192 LLCs and opened 114 bank accounts, with some $41.7 million deposited into accounts under Underwood’s control, representing concealed income. One client, Jerry Shrock, had three LLCs formed by National Business while undergoing an IRS audit. Despite the audit, Shrock transferred his home into one of the LLCs to shield it from the government. Between 2011 and 2015, he deposited nearly $4.9 million into a bank account opened for one of his LLCs, concealing more than $4.3 million in income without ever filing returns.

Underwood previously pleaded guilty to conspiracy to defraud the United States; her sentencing is pending. She faces up to five years in prison to be followed by up to three years of supervised release. Shrock pleaded guilty to conspiracy to defraud the U.S. and was sentenced to five years of probation and ordered to pay $1,542,769.70 in taxes, interest and penalties.

Upon his release from prison, Wellington will be subject to three years of supervised release and is prohibited from ever running any business advising clients or dealing with the IRS.

Continue Reading

Accounting

House passes tax administration bills

Published

on

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.”

Continue Reading

Accounting

In the blogs: Many hats

Published

on

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!

Continue Reading

Accounting

Is gen AI really a SOX gamechanger?

Published

on


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

Continue Reading

Trending