Pacific time; the foreign country of Texas; COVID fine; and other highlights of recent tax fraud cases.
Tucson, Arizona: Exec Lynda Jean Zimmermann, 49, has pleaded guilty to one count of filing a false return.
During 2014 she and her husband, Christoph Zimmermann, co-owned Wxline LLC, which provided lightning detection and warning equipment for golf courses, parks and mines. Her husband founded the company and ran the day-to-day operations. Lynda Zimmermann admitted that she was responsible for keeping the financial records and submitting the information to their accountants who prepared the 1040s.
For her 1040 for 2014, Zimmermann admitted that she provided a gross receipts figure for Wxline that was significantly lower than the true number. She provided a total gross receipts figure of $1,322,680 when the actual number was some $2,405,276. This resulted in an underreporting of some $1,082,596 on the return.
She has agreed to pay the IRS $1,088,649.22 before sentencing, which is June 21.
Yutan, Nebraska: Businessman Wayne M. Morris has been sentenced for making a false statement on a return.
Morris was sentenced to six months of community confinement and six months of home confinement. Morris will also serve a year on supervised release and pay $257,731 in restitution and a $10,000 fine.
The IRS reviewed returns filed by Morris and his roofing business and also bank records, both personal and business. The IRS eventually determined that Morris had been claiming far less in gross receipts on his returns than the financial transactions reflected in the bank account records: Morris had reported low amounts of income on his returns and at one point appeared to qualify for the Earned Income Tax Credit. He opened a bank account in the Philippines and failed to declare on his returns the existence of that account or its interest.
The IRS determined that between 2000 to 2015 Morris could not have accumulated the amount in his Philippines account through the reported earned income and receipts from his roofing business.
Irvine, California: Jean Guy Minn, a South Korean national residing in the U.S. as a legal permanent resident, has agreed to plead guilty to tax evasion.
The charge stemmed from failing to report on a federal income tax return interest he earned from bank accounts he controlled in Hong Kong and Singapore. The information accuses Minn of filing a personal return for 2016 that failed to report $552,454 in interest income he earned from a foreign bank account. As a result, Minn failed to pay $162,369 in federal income tax for that year.
Minn admitted that he failed to report a total of $2,365,427 of interest income for the tax years 2010 through 2017 and agreed to pay $573,916 in back taxes for the eight years and an as-yet-undetermined amount of penalties.
The maximum for the tax evasion offense is five years in prison.
Dallas: Resident David Marcus Easler has pleaded guilty to attempting to obstruct the due administration of U.S. internal revenue laws.
Between 2009 and 2017, Easler earned some $836,699 in wages, yet as of January 2019 had an outstanding tax balance of some $326,257. This substantial tax due was a result of his failure to pay his income taxes dating back to 1996.
Since at least 2004, the IRS sent Notices of Levy on Wages to Easler. When the IRS became aware of his employment with a particular company, the service attempted to collect past due income taxes by either withholding taxes from his salary or by using tax levies and/or garnishment of wages from Easler’s employer.
In response to IRS efforts to collect his past due taxes, Easler filed four voluntary petitions for bankruptcy. With some of these bankruptcy filings, he submitted fraudulent returns and other return-related documents. For example, as part of his 2009 bankruptcy filing, he submitted several income tax returns that falsely reported that he made “0” dollars of taxable income.
In 2011 and 2013, Easler signed and filed three false 1040NRs in which he represented that he was a non-resident of the United States living in the foreign country of Texas. Easler also falsely claimed that he was due tax refunds.
From 2012 through 2015, he provided employers with false W-4s on which he fraudulently inflated the number of exemptions. On some W-4s, Easler falsely claimed he was “exempt” from the withholding of any taxes from his paychecks.
In November 2014, Easler testified at a bankruptcy hearing during which the judge told Easler that his theory to justify his non-payment of income taxes was “all a big ruse to keep people from paying taxes,” adding that Easler’s theory amounted to a “tax evasion system,” and that if Easler continued to refuse to pay his income taxes, “it’s not going to do anything for you in the courts of this country.”
Easler continued his efforts by filing two additional bankruptcy petitions in 2015 and 2016.
He faces up to three years in prison. Sentencing is Aug. 13.
Upper Marlboro, Maryland: Tax preparer Veronica Hope Fortune has pleaded guilty to conspiracy to defraud the U.S. and to assisting in the preparation and filing of false returns.
In August 2015 Fortune was a preparer in Maryland with federal e-filing privileges. She let two conspirators, both of whom had been suspended from the IRS e-filing program, use her electronic filing identifiers in exchange for use of office space in Temple Hills, Maryland. The conspirators misrepresented their identities on their clients’ returns by using Fortune’s identifiers.
Fortune also joined in her conspirators’ practice of falsifying returns and fraudulently claiming refunds. The three falsified returns with phony items on the Schedules A and engineering business losses on Schedules C with bogus expenses.
On Dec. 15, 2017, the IRS also expelled Fortune from the e-filing program due to a criminal investigation into fraudulent returns filed using her unique identifiers. Fortune then made misrepresentations about the criminal nature of her issues with the IRS to a third-party electronic return originator to obtain their assistance. That party allowed Fortune to file returns using its e-filing identifiers, and Fortune shared those identifiers with her two conspirators. The three continued to prepare and file false returns through at least the 2019 season.
The federal tax loss totaled $189,748. Fortune will be required to pay restitution in the full amount. She also faces a maximum of eight years in prison. Sentencing is Aug. 20.
Richmond, Virginia: Preparer Willette J. Holland has pleaded guilty to tax evasion.
Holland owned the prep service Tax Professionals. In August 2014, the IRS contacted Holland because she did not file personal returns for 2010 through 2013. Holland then presented false returns to the IRS for those years that substantially underreported her gross receipts and taxes due. Holland additionally attempted to evade taxes for 2014 by depositing income into a bank account held in the name of a nominee. In 2015 and 2016, Holland again did not file returns.
Holland is scheduled to be sentenced on July 15 and faces a maximum of five years in prison as well as a period of supervised release, restitution and monetary penalties.
Lynn, Massachusetts: Ariana Murrell-Rosario, owner of a Liberty Tax office, faces $136,532 in penalties for COVID-related violations.
The U.S. Department of Labor’s Occupational Safety and Health Administration found that Murrell-Rosario and Liberty Tax Services prohibited employees and customers from wearing face coverings in the workplace despite a statewide mandate to do so; required employees to work within six feet of each other and customers for multiple hours while not wearing face coverings; failed to provide adequate ventilation at the workplace; and failed to implement controls such as physical barriers, enhanced cleaning and other methods to reduce the potential for transmission of the virus.
