Tax Preparers and Criminal Exposure: Be Careful Out There!

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Jason B. Freeman

Jason B. Freeman

Managing Member

214.984.3410
jason@freemanlaw.com

Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine , a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

Tax Preparers and Criminal Exposure: Be Careful Out There!

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.