On ice; the end of the beginning; Speed trap; and other highlights of recent tax cases.
Miami: A federal court has issued a permanent injunction against tax preparer Richard Louis that bars him from preparing federal income tax returns, working for or having any ownership stake in a tax prep business, assisting others (including family members) prepare returns or setting up business as a preparer and transferring or assigning customer lists to any other person or entity.
In June, the court enjoined seven independent contractors who worked with Louis — Harold Bornelous, Romeo Davis, Teddy Davis, Joseph Garrett, Demetrius Knowles, Daniel Oku and Marlyne Wah — from preparing returns for others but allowed them to apply for reinstatement after two years if they successfully complete the IRS Annual Filing Season Program. The contractors agreed to the injunctions.
The complaint alleged that Louis and the seven contractors prepared returns that claimed various false or fabricated deductions and credits, including fabricated residential energy credits, false and exaggerated itemized deductions, and fictitious and inflated business expenses. According to the complaint, Louis marketed himself as Taxman and he with the seven contractors prepared thousands of returns for clients over the past 10 years.
The court also ordered Louis to disgorge $390,000 from the scam that he'd received from his prep business. He agreed to both the injunction and the disgorgement.
Moon Township, Pennsylvania: Business owner Albert Boyd Jr. has pleaded guilty to willfully filing a false return.
For each year from 2017 to 2022, Boyd failed to report income from his company, Boyd Roll-Off Services, on the business return, causing a total tax loss of at least $1,030,000.
Boyd ensured that much of the company's income from the sale of scrap metal went unreported by causing cash proceeds not to be deposited in the business bank account and causing checks to be deposited into accounts other than the business bank account. Boyd then failed to provide his tax preparer with records relating to the undeposited cash and diverted checks.
Sentencing is Dec. 17. He faces up to three years in prison and a fine.
Des Moines, Iowa: Businessman Mark Francis Davidson, 66, formerly of Adel, Iowa, has been sentenced to 18 months in prison for filing a false income tax return.
Davidson is the majority shareholder of Collegiate Concepts Inc., which rents dorm minifridges to colleges and college students. From 2015 to 2021, Davidson diverted more than $3.8 million from the corporation to himself and failed to report this income to the IRS. Davidson concealed these payments from the corporation's accountant and tax preparer by providing check ledgers that falsely identified checks from the corporation to Davidson as legitimate business expenses.
After his imprisonment, Davidson will be on supervised release for a year. He was also ordered to pay $1,449,620 in restitution to the IRS and a fine of $20,000.
Frankfort, Illinois: Jeremiah Johnson, owner of three local childcare and transportation businesses, has been sentenced to a year and a day in prison for underreporting more than $1.47 million in income.
Johnson owned New Beginnings Academy, New Beginnings Child Development and Epic Transportation. From 2015 to 2020, he obtained more than $1.47 million of income from the operation of those businesses but failed to report the money on his individual returns, instead reporting lesser W-2 wages and some rental income.
During the same period, Johnson also failed to file corporate returns or pay any of the required employer and employee withholdings for federal income tax, Social Security tax and Medicare.
Johnson, who pleaded guilty earlier this year, was also fined $10,000 and ordered to pay $123,391 in restitution to the IRS.
Wilmington, North Carolina: Businessman George William Taylor Jr. has pleaded guilty to not paying more than $2 million in employment taxes and not filing employment tax returns.
Taylor owned and operated National Speed, a service business for high-speed automobiles. He was responsible for withholding Social Security, Medicare and income taxes from employees' wages and paying those taxes to the IRS. From 2014 through 2021, Taylor withheld the taxes but did not pay those withholdings over to the IRS, nor did he file the necessary employment returns. During the same period, he also did not pay the employer's share of those taxes to the IRS.
In total, Taylor caused a federal tax loss of $2,272,072.
Sentencing is Nov. 19. Taylor faces up to five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Cincinnati: A U.S. district court has issued a permanent injunction against tax preparer Emmanuel Antwi and his businesses.
Antwi and his businesses, Manny Travel Agency & Business Services Inc. and Manny Financial, Insurance & Accounting Firm LLC, consented to the injunction, which permanently bars them from preparing federal returns for others. The United States' claim demanding that Antwi turn over ill-gotten gains he received in tax prep fees remains pending.
According to the civil complaint, since at least 2020 Antwi filed hundreds of returns each filing season with at least 95% of the returns claiming a refund. Allegedly, Antwi knowingly took unreasonable or incorrect positions on returns he prepared that resulted in understatements of the tax that his clients owed and overstatements of refunds.
In particular, the complaint alleges that Antwi prepared returns that claimed deductions for purported business losses or employee business expenses that he knew were false. The complaint also alleges that Antwi prepared returns where he knowingly reported the wrong filing status.
Antwi must send notice of the injunction to each person for whom he or his businesses prepared federal returns, amended returns or claims for refund after Jan. 1, 2019. He must also post a copy of the injunction both on websites that he and his businesses maintain and at physical locations where any business is conducted.
Newnan, Georgia: Business owner Barry Lee White, of Carrollton, Georgia, has been sentenced to 22 months in prison to be followed by three years of supervised release for willful failure to pay more than $2.4 million in payroll taxes.
Between 2012 and 2019, White owned and operated, at different times, two construction maintenance and electrical companies that were required to withhold from employees' gross pay FICA taxes and as sole operator of the companies, White had the responsibility to collect, truthfully account for, and pay the IRS the payroll taxes.
From at least 2015 to 2018, White withheld more than $1.8 million in payroll taxes from his employees but failed to pay the taxes to the IRS and failed to pay more than $600,000 for the employer's portion of the payroll taxes.
Convicted of the charges in May after pleading guilty, White was also ordered to pay $2,499,473.07 in restitution.
