Tax Preparers and Criminal Exposure: Be Careful Out There!

In Criminal by Jason FreemanLeave a Comment

The recent case of United States v. Berger demonstrates the criminal exposure that accountants face when advising clients about taxes and preparing tax returns.  In that case, Berger, a CPA, was found guilty of aiding and abetting the preparation of false tax returns.  A copy of the Indictment is available here.  The charges, which were brought under IRC section 7206(2), are the subject of a prior Freeman Law Insight.


Berger spent a 45-year career as a CPA.  He served as the chair of the board of a respected accounting firm.  His downfall came about for his role in preparing tax returns that classified transfers of money from his client’s investment fund to several management companies as a repayable debt rather than income.  Ultimately, this concealed the nature of the taxable transfers from the IRS, as the funds were transferred to bank accounts in the names of several entities that were ultimately controlled by the accountant’s client.  The client undertook the transfers with the intent to conceal his control and spending of the funds.  This effort was, in part, furthered by false entries in the books and records of the entities.

The improper classification of transfers as repayable debt rather than income is a common example of conduct that can potentially fall under section 7206(2)’s prohibition against the aiding or assisting the preparation of a false tax return.

Mr. Berger’s client ultimately pled guilty to one count of investment-adviser fraud and one count of tax evasion.  The crime of tax evasion is the subject of a prior Freeman Law Insight.  He faced up to five years on each count, but was ultimately sentenced to 30 months in prison for the false tax returns.  Mr. Berger himself faces up to 78 months in prison for the three counts of aiding and abetting those false returns.


For other Insights on tax crimes, see The Crime of Tax EvasionSection 7206(1): False Tax Returns and Statements, and The IRS and Big Data: The Future of Fighting Tax Fraud.

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