Careless; the PTIN shuffle; time for Time; and other highlights of recent tax cases.

Washington, D.C.: Recent IRS Office of Professional Responsibility disciplinary sanctions include censure, suspension or disbarment from practice before the IRS. Individuals disciplined include (all dates 2024):

• Milton, Georgia: CPA Peter J. Tarantino, indefinite from July 22.
• Hampton, Iowa: Attorney Daniel F. Wiechmann Jr., indefinite from July 18.
• St. Louis: CPA Richard L. Van De Riet, indefinite from Aug. 20.
• New City, New York: CPA George J., Silverman, indefinite from Aug. 14.
• Shelby, North Carolina: Appraiser Walter “Terry” D. Roberts II, indefinite from Aug. 2.
• Philadelphia: CPA Howard C. Lapensohn, indefinite from July 22.
• Signal Mountain, Tennessee: Attorney David J. Fulton, indefinite from Aug. 8.
• Round Rock, Texas: CPA Chuks L. Iheke, indefinite from Aug. 21.

Meanwhile CPA John J. Savignano, of White Plains, New York, was reinstated to practice before the IRS effective July 17.

Albuquerque, New Mexico: Stacy Underwood, third and final defendant in a tax scheme that operated for more than a decade, has been sentenced to time served to be followed by three years of supervised release, and ordered to pay more than $5.5 million restitution.

David Wellington of Albuquerque was previously sentenced to 40 months in prison and ordered to pay more than $5.5 million restitution for his role; he was also permanently prohibited from running any business advising clients or dealing with the IRS. Jerry Shrock, of Meadowview, Virginia, was sentenced to five years of probation and ordered to pay $1.5 million in taxes, interest and penalties.

Between 2005 and 2015, Wellington and Underwood operated National Business Services, which specialized in creating LLCs for clients seeking to evade federal taxes. The pair organized at least 192 LLCs in New Mexico and opened at least 114 bank accounts for these clients.

Underwood was sole signer for 99 of these accounts, allowing clients to conduct financial transactions anonymously. From January 2011 to July 31, 2018, more than $40 million was deposited into clients’ accounts nominally controlled by Underwood.

Shrock had three LLCs formed by National Business Services while undergoing an IRS audit. 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 filing returns.

Syracuse, New York: Robert Rahrle, formerly of Florida and now residing in New York, has pleaded guilty to tax evasion and wire fraud.

Rahrle admitted that from 2017 through 2024 he ran a fraudulent online gift basket website called iCare Gifting Solutions LLC, which purported to cater to families of incarcerated individuals, promising to send care packages into prisons. The company charged hundreds of customers some $50 a basket but never sent the gift packages.

He also evaded federal taxes; he self-prepared and filed returns for 2017 and 2018 that falsely reported business losses and failed to report hundreds of thousands of dollars of gross receipts.

Sentencing is June 11. Rahrle faces up to five years in prison on the tax evasion charge and up to 20 years on the wire fraud charge, along with a post-imprisonment term of supervised release of up to three years. He could also be fined up to $250,000 or a fine based on his gain or the victims’ losses; he owes restitution to the IRS of some $175,000 and restitution to the victims of his fraud; and he must forfeit $2 million to the United States. 

Germantown, Wisconsin: IT consultant Vikram Naik has submitted what authorities called a “shamefaced plea” to one count of filing a false individual income tax return.

He was indicted in October with three counts of filing false 1040s for 2017, 2018 and 2019. Naik had federal income tax withholding amounts that were substantially less than he reported on each of the federal returns he filed and had taxable income and total tax owed greater than he reported.

Naik owned and operated Naik Consulting Inc. since 2015, providing services to some clients who treated him as an employee, paid him wages and provided W-2s. Other clients treated Naik as a contractor. Naik was his company’s only employee, and he issued himself a W-2.

From 2016 through 2019, Naik inflated withholdings on his 1040s. He falsely reported on W-2s from his company that it had withheld federal income tax from his wages of $60,000 in 2017, $61,500 in 2018 and $146,000 in 2019. Naik Consulting never actually withheld and paid over to the IRS any federal income taxes from Naik’s wages. He did the same with some of his consulting clients in tax years 2018 and 2019, as well as his wife’s employer in 2018, inflating the federal income tax withheld. His 1040s claimed that he was entitled to sizable refunds for each of those years.

He caused a tax loss of some $277,257.

Sentencing is March 21. Naik faces up to three years in prison and a $250,000 fine, as well as a term of supervised release after any imprisonment.

St. Louis: Tax preparer Shasherese M. Reed, 53, has admitted preparing fraudulent tax returns.

Reed admitted using a tax prep business, Majac Money, which was opened by her daughter because the IRS revoked the PTIN assigned to Reed and her business, Sha-Sha Taxes, in 2015. Reed falsely identified her daughter as the paid preparer on the returns that Reed prepared at Majac Money.

On these returns, Reed commonly included a false Schedule C that reported tens of thousands of dollars in business expenses when the taxpayer either had substantially smaller expenses or did not own a business. Reed also claimed false and fraudulent deductions for such items as state and local taxes, medical and dental expenses, and mortgage interest.

She admitted preparing a fraudulent return for an undercover IRS agent; without asking if the agent had a business, Reed prepared a return that included a false Schedule C showing $26,242 in expenses.

Reed charged clients hundreds of dollars in fees for preparing returns, making about $378,026 in fees for the 2017 to 2021 tax years. She prepared at least 41 false tax returns for 13 different taxpayers, costing the IRS at least $312,192.

Sentencing is May 6.

Montgomery, Alabama: Tax preparer Natoshia Lashawn Crawford, 47, has been sentenced to 30 months in prison for making false returns and assisting in the filing of false returns.

From 2018 through 2022, Crawford owned and operated On Time Professional Tax Service, where she prepared and filed federal income tax returns for clients. Crawford admitted that she included false information on returns filed on behalf of herself and others to, in some cases, inflate refunds.

In one example, Crawford reported a total income of $23,116 in her 2020 return and when she pleaded guilty in May admitted that she knowingly excluded other income from her business. The false reporting of Crawford’s income for 2020 resulted in a lower amount of tax due and an underpayment to the IRS of $32,867.

Crawford further admitted to filing a 2019 return for a client claiming a loss of $90,171 for a janitorial services business that did not exist and admitted that multiple false returns she filed for herself and others during the 2017 to 2021 tax years caused a total loss of $1,721,047.45 to the IRS.

Crawford was also ordered to pay restitution to the IRS.