Tax evasion carries severe penalties, even in cases in which no one else has been defrauded.
From 2005 through 2011, Semere Tsehaye owned more than 20 Instant Tax Service (ITS) franchises in Illinois, Kansas and Missouri, under the names A&S Tax Service LLC and ERI Enterprises LLC.
In 2010 and 2011, Tsehaye evaded $581,264 in taxes by generating fraudulent financial summaries for A&S and ERI. He provided these summaries to his tax preparer, who in turn used them to prepare Tsehaye’s federal income tax returns. The 2010 summary understated his gross receipts by $547,895, and the 2011 summary understated his gross receipts by roughly $1.03 million.
Charges and sentence
Tsehaye was charged and convicted of two counts of tax evasion. The case was investigated by special agents of the Internal Revenue Service Criminal Investigations Division.
On January 23, 2017, Tsehaye was sentenced to 27 months imprisonment and three years of supervised release. He was also ordered to pay $298,178 restitution to the IRS.
Although in this case Tsehaye’s crimes related only to his own tax returns and not to those of his clients, the fact that Tsehaye was a tax preparer – who was clearly aware of what he was doing and who consciously tried to cheat the system – clearly had a strong effect on his sentence.
Note that many tax return preparers who are convicted of tax evasion not only face greater penalties but are often barred from ever working as a tax professional again.
California criminal tax defense attorneys
The criminal defense attorneys at Moskowitz, LLP assist individuals and companies with a wide variety of financial criminal matters, including but not limited to those relating to tax crimes, bank secrecy act violations, currency crimes, and tax preparer defense. If you are being investigated for a tax or other financial crime, call our San Francisco office without delay.