Arizona Tax Preparer Pleads Responsible to Submitting False Tax Returns in Abusive-Belief Scheme

Kent Ellsworth, an Arizona tax preparer, pleaded responsible to 2 counts of aiding within the preparation of false tax returns. This was a part of a nationwide scheme that utilized abusive-trust tax shelters to defraud the IRS. Ellsworth’s fraudulent actions carried out by way of his enterprise, Ellsworth Stauffer P.C., hid greater than $60 million in earnings from the IRS, leading to roughly $17 million in misplaced tax income.

Ellsworth’s responsible plea highlights a major victory within the struggle towards tax fraud. The case underscores the IRS and Justice Division’s dedication to figuring out and prosecuting those that have interaction in tax evasion schemes. Companies and people are reminded of the significance of complying with tax legal guidelines and the extreme penalties of trying to defraud the IRS.

Particulars of the Fraud

From 2017 to 2023, Ellsworth ready and filed over 500 false tax returns for round 60 shoppers throughout the nation. These shoppers, largely profitable enterprise house owners, used the tax shelter to underreport their earnings and evade tax liabilities. The scheme concerned shoppers assigning almost all their earnings to sham trusts and a so-called “non-public household basis,” falsely claiming these as official to keep away from taxes. Nevertheless, these entities had been mere financial institution accounts beneath the shoppers’ management, not official trusts or foundations.

Ellsworth was educated to organize tax returns utilizing these fraudulent strategies, reporting earnings as belief earnings and offsetting it with deductions for private bills. He earned charges from the shoppers who participated within the tax shelter, furthering the scheme’s attain and affect.

Ellsworth’s responsible plea means he faces critical authorized penalties. He’s scheduled for sentencing on August 14 and will obtain a most of three years in jail for every depend of making ready and submitting false tax returns. Moreover, he faces fines as much as $250,000, a interval of supervised launch, and prosecution prices for every depend. The ultimate sentence will probably be decided by a federal district court docket decide, who will take into account the U.S. Sentencing Pointers and different related components.

Performing Deputy Assistant Lawyer Basic Stuart M. Goldberg of the Justice Division’s Tax Division and Particular Agent in Cost Andy Tsui of IRS Legal Investigation’s (IRS-CI) Denver Subject Workplace introduced Ellsworth’s responsible plea. The IRS-CI is main the investigation, with Trial Attorneys Amanda R. Scott and Lauren Ok. Pope, together with Senior Litigation Counsel Corey J. Smith of the Tax Division, prosecuting the case.

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This text, “Arizona Tax Preparer Pleads Guilty to Filing False Tax Returns in Abusive-Trust Scheme” was first printed on Small Business Trends