Connect with us

Accounting

Tax Fraud Blotter: What nerve

Published

on

Journey’s end; just shocking; house cleaning; and other highlights of recent tax cases.

Pueblo, Colorado: Resident Solomon Paul Garcia has been sentenced to a year and a day in prison, to be followed by three years of supervised release, for tax evasion.

Garcia worked for various employers as a journeyman electrical lineman. From 2016 to January 2020, he avoided income tax by submitting to his employers W-4s that claimed up to 99 allowances or false claims of exemptions. During this time, Garcia was only allowed to claim two allowances.

Although Garcia had an opportunity to pay all taxes due and owing for each calendar year by the respective filing deadlines, he did not file a tax return for any of the years, resulting in the evasion of $267,028.50 in federal taxes.

Garcia was also ordered to pay restitution, including interest and penalties, of more than $548,000.

Attleboro, Massachusetts: David Tetreault, 54, the former bookkeeper for an electrical and contracting business, has agreed to plead guilty to concealing income from the IRS and to stealing disability benefits.

Tetreault worked as a bookkeeper for a Massachusetts-based electrical contractor between 2015 and 2021, when he received wages in cash and used company funds to pay his personal credit card bills. He allegedly manipulated the company’s accounting records and bank statements to disguise these payments as business expenses.

Tetreault underreported his personal income by at least $2.1 million and caused a loss to the IRS of more than $600,000.

Charges also alleged that Tetreault failed to report his work for the electrical contractor or his income to the Social Security Administration and submitted false information about his employment and income to the Employees’ Retirement System of Rhode Island. He collected more than $320,000 in undeserved Social Security Disability Insurance benefits and state disability pension benefits between 2016 and 2024. 

He has agreed to plead guilty to one count of tax evasion, one count of theft of government money and one count of wire fraud. Tax evasion provides for up to five years in prison and three years of supervised release; theft of government money provides for up to 10 years in prison and three years of supervised release; wire fraud provides for up to 20 years in prison and three years of supervised release. All the charges also carry a fine of up to $250,000 or twice the gross gain or loss, whichever is greater.

Chester, Connecticut: Resident Evan Bobzin has pleaded guilty to offenses, including tax charges, from a $2 million embezzlement.

From July 2013 until December 2023, Bobzin was employed by Hoffman’s Gun Center in Newington, Connecticut, and, in 2016, became the head of information technology at Hoffman’s. In January 2016, Bobzin began to steal cash receipts from a company safe in the company’s front office.

Between 2016 and 2023, Bobzin and his former spouse made 287 cash deposits of stolen money from Hoffman’s totaling $1,901,250 into his bank accounts, and seven cash purchases of cashier’s checks totaling $161,330. Bobzin used the funds to pay for personal expenses.

In October 2022, the U.S. Attorney’s Office notified Bobzin that he was conducting cash transactions in amounts below $10,000 in a manner indicative of structuring to avoid having his bank file currency transaction reports. Bobzin ceased making cash deposits at his bank, opened new accounts at a different bank and resumed making structured cash deposits into those accounts.

Bobzin failed to report the stolen income on his federal personal income tax returns for 2016 through 2022, resulting in a loss to the IRS of $436,178. As an example, on his income tax return for the 2020 tax year, Bobzin reported taxable income of $9,914 and tax owed of $0. The return omitted income of some $432,615 and understated tax due and owing by some $110,530.

Sentencing is Nov. 26. Bobzin pleaded guilty to one count of interstate transmission of stolen money, which carries up to 10 years in prison, and one count of tax evasion, which carries a maximum term of five years. He has also agreed to pay $2,062,580 in restitution and to cooperate with the IRS to pay $436,178 in taxes, as well as penalties and interest.

Hands-in-jail-Blotter

Madison, Wisconsin: Investment advisor Eric Upchurch has been sentenced to 28 months in prison for wire fraud, making false statements to the Small Business Administration and money laundering related to the Paycheck Protection Program.

Throughout 2020 and 2021, Upchurch submitted fraudulent PPP loan applications on behalf of several businesses, falsely claiming that his businesses earned hundreds of thousands of dollars in revenue and paid employees tens of thousands of dollars in payroll a month. He also provided lenders with forged payroll reports and tax forms.

None of Upchurch’s companies formally employed anyone besides Upchurch, and none had the revenue necessary to cover the claimed payroll.

Upchurch stole $406,211 and attempted to steal an additional $400,378 in PPP money. He also laundered a portion of his fraudulently obtained PPP funds when he purchased $19,000 worth of bitcoin.

Agawam, Massachusetts: Tax preparer Colleen Gruska, 66, has been sentenced to two months in prison to be followed by a year of supervised release (the first six months to be served in home confinement) for filing false returns.

For more than a decade, Gruska used her tax prep service to file dozens of false returns for herself, her relatives and others. On these returns, she reported business losses that were either dramatically overstated or were for businesses that did not exist, resulting in little or no federal income tax owed by the taxpayer.

In her own filings, Gruska reported $189,000 in expenses over four years for a house and yard cleaning business despite there being no actual expenses, enabling her to avoid $36,079 in taxes. For a relative, she filed false returns that claimed a non-existent soccer coaching business with expenses totaling $233,561, enabling the relative to avoid $39,599 in taxes.

Gruska, who pleaded guilty in January, caused a loss to the IRS of $261,102 and was ordered to pay that amount in restitution.

Lee’s Summit, Missouri: Neurologist Maria Donato has pleaded guilty to failing to report cash income from her practice on her federal returns.

Donato owned and operated Forest Park Neurology, where she practiced from 2012 to 2019. Her patients sometimes paid cash for her services from 2015 through 2019, but Donato failed to report the full extent of her cash income on her federal income tax returns. She specifically pleaded guilty to failing to report more than $120,000 in cash income in 2017. She also failed to properly report her cash income on her Missouri tax returns during those years.

Concord, North Carolina: Exec Ronald James McMurphy has pleaded guilty to failing to collect or pay over taxes.

From around the first quarter of 2016 to and including the third quarter of 2022, he was president of McMurphy Hydraulics Inc. and from around the fourth quarter of 2019 up to and including the third quarter of 2022 was also president of Powertek Equipment Inc., a manufacturer of heavy equipment for construction and forestry.

McMurphy was responsible for accounting for and paying to the IRS the employment taxes for both companies. For various tax periods, McMurphy failed to truthfully account for and pay over the trust fund taxes and employer matching taxes due and owing to the IRS on behalf of the companies’ employees.

The employment tax liability for which McMurphy is accountable is $712,017.

Sentencing is Dec. 12. He faces up to five years in prison, as well as a period of supervised release of up to three years and monetary penalties.

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