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Tax Fraud Blotter: ‘Ship em out

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Brace yourself; more Ultimate crimes; good enough; and other highlights of recent tax cases.

Providence, Rhode Island: Mortgage broker Joseph Giuttari has admitted to stealing from investors, to filing fraudulent applications for Economic Injury Disaster Loans, and to failing to report an income of more than $540,000.

Giuttari, owner and operator of Hybrid Capital Group, The Fens Co. and Realty Funding Advisors, among others, pleaded guilty to wire fraud, theft of government property and filing a false return. He allegedly misrepresented to investors the amount a borrower was interested in obtaining; misrepresented that documents were in place to secure the investment funds; inflated how much borrowers owed; used borrowers’ names without their authorization to obtain funds from investors; and created fraudulent promissory notes and real estate documents bearing forged signatures of borrowers. He also admitted that he appeased certain earlier investors and lenders by paying them back using money from new investors.

The government claims the loss is between $3.5 million and $9.5 million.

Giuttari admitted that he also fraudulently applied for and acquired more than $160,000 in EIDLs for Hybrid Capital and Fens, claiming on the applications that his companies were not engaged in lending or investments.

He also admitted to falsely stating on his 2019 federal personal income tax return that his total income was $22,176, when in fact it was at least $541,000.

Sentencing is Jan. 30.

Oakland, New Jersey: Business owner Walter Hass, 62, of Hewitt, New Jersey, has admitted to a $3.5 million payroll tax evasion.

Hass owned and operated a shipping/logistics company and since 2014 has operated the company under three different names. From 2014 to 2022, he failed to pay over to the IRS at least $3.5 million in payroll taxes. Instead, he used company money to fund his personal lifestyle, including the purchase of luxury vehicles, high-end watches and jewelry, designer clothing items and accessories, tickets to sporting events, home renovations, vacations, water sports vehicles and extravagant meals.

The charge is punishable by up to five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater. Sentencing is April 22.

Fresno, California: Former resident Pilar Rose has pleaded guilty to tax evasion and obstructing an IRS audit.

From 2012 through 2015, Rose prepared false financial statements for her husband’s orthodontics practice that significantly underreported profits. Rose evaded more than $870,000 that she and her husband owed in federal taxes.

In June 2015, Rose had sought a $1.5 million home mortgage refinance loan on the couple’s mansion. She submitted copies of her and her husband’s federal returns that showed significantly greater income than was reported on the actual returns they filed with the IRS. The bank declined the loan after discovering the discrepancies.

A month later, Rose applied to a second bank for a home mortgage refinance loan and represented that their bank accounts had a combined balance of more than $250,000 when they had less than $3,000. She also submitted copies of her and her husband’s federal returns and a P&L that significantly exaggerated the profitability of her husband’s orthodontics practice. The second bank approved the loan.

In early 2016, Rose obstructed an IRS audit of her and her husband’s taxes. She altered hundreds of checks for the couple’s non-deductible personal expenses such as their mortgage, utilities, landscaping, pool cleaning, cars, credit cards and children’s college tuition, to make it appear as though the checks were for deductible business expenses. She also created false financial statements for her husband’s orthodontics practice to match the altered checks.

In 2017, Rose purchased a new BMW for some $90,000, financing $65,000 through a loan from a third bank. On that loan application, she represented that she was an attorney who made more than $600,000 per year. She was not an attorney, and she used the Social Security number of her husband’s former dental school classmate because she knew that using her real Social Security number would reveal a low credit score. The loan was approved.

Sentencing is March 17. She faces up to five years in prison and $100,000 fine for the tax evasion charge and an additional three years and a $5,000 fine for the obstruction charge. Rose agreed to forfeit her interest in more than $2.5 million of proceeds from the sale of her and her husband’s mansion and BMW that authorities previously seized.

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Strongsville, Ohio: Dr. Suman Jana has pleaded guilty to corruptly endeavoring to obstruct the due administration of internal revenue laws.

Jana was a client of fraudulent tax shelter promoter Michael Meyer and his sub-promoter Rao Garuda, who used Meyer’s scheme called the “Ultimate Tax Plan” to fraudulently claim $764,350 in charitable contribution deductions for 2012 through 2015.

Meyer and his co-conspirators marketed the scheme as a way for high-income clients to reduce their taxes by claiming they had donated valuable property to charities Meyer controlled while retaining complete control and use over their “donated” assets. Jana used the funds he claimed to have donated to charity to, among other things, purchase several cars for himself and his wife.

In 2017, after claiming five years’ worth of charitable contribution deductions, Jana bought back the company he had “donated” to Meyer’s charity for $10,000, reclaiming his purported donation and exiting the plan.

In April 2018, the Justice Department filed a civil complaint for a permanent injunction against Meyer and the following month served a civil subpoena on Jana requesting that he produce records in connection with the Ultimate Tax Plan. Meyer and Garuda instructed Jana to pretend that the buyback did not occur. Meyer prepared backdated transaction documents, written acknowledgements and promissory notes for Jana to sign and submit in response to the civil subpoena, the false documents making it look as if Jana signed the promissory notes at the time that he and his wife paid personal expenses out of the purported charity. Jana signed the documents.

Sentencing is March 7. Jana faces a maximum of three years in prison, as well as a period of supervised release, restitution and monetary penalties.

Athens, Georgia: Tax preparer Jessica Crawford has admitted to filing more than $3 million in fraudulent returns on behalf of clients.

FBI agents investigating a multistate unemployment benefit scheme conducted during the COVID-19 pandemic discovered text messages between individuals involved in the scheme and Crawford, a preparer with Crawford Tax Services. Crawford filed for pandemic unemployment assistance benefits on behalf of those individuals, who had created fake businesses or submitted false information to fraudulently obtain benefits. Crawford received a percentage of the benefits.

In April 2022, an undercover IRS agent met Crawford to have taxes prepared and Crawford asked if the agent did anything on the side. At first the agent responded no. When Crawford said that expenses could be deducted if he did, the agent replied that he mowed an aunt’s lawn sometimes and Crawford said that was “good enough,” authorities said.

Despite the agent providing no income or expense amounts, Crawford created a Schedule C business for landscaping on the agent’s federal income tax return based solely on that interaction. Crawford prepared a 1040, including a fictitious Schedule C loss of $19,373, and claimed the Earned Income Tax Credit, the Child Tax Credit and qualified business income deduction that were affected by the fraudulent Schedule C loss. As a result, the agent’s return claimed a fraudulent federal refund of $12,359.

The IRS reviewed 1,261 returns filed by Crawford in 2020 and 2021 and determined that Crawford fraudulently filed returns for clients that resulted in losses to the IRS exceeding $3 million from falsely claimed 7202 credits for sick leave and family leave, tax credits and dependent care credits.

Crawford faces a maximum of 30 years in prison to be followed by five years of supervised release and a $1 million fine. Sentencing is March 19.

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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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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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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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