Indianapolis CPA Pleads Guilty to Illegal Tax Shelter Scheme

An Indianapolis CPA has admitted guilt in connection with an illegal tax shelter scheme. Jason L. Crace, the defendant, prepared false tax returns for clients, causing significant losses to the IRS.

From 2013 to 2022, Crace assisted clients in Mississippi and other locations by filing tax returns with fraudulent deductions for “royalty payments.” According to court documents, these payments were not legitimate business expenses. Instead, they were part of a scheme where participants sent money to accounts controlled by promoters, who then returned the money to accounts controlled by the participants. This circular flow of money created the illusion of legitimate business expenses, allowing participants to claim false deductions on their tax returns. The decision on the amount of “royalties” to pay was based solely on how much income the participants wanted to hide from the IRS.

Crace’s actions resulted in at least $2,532,936 in losses to the IRS. He is scheduled for sentencing on January 14, 2025. Crace faces a maximum prison sentence of three years, along with supervised release, restitution, and monetary penalties. The final sentence will be determined by a federal district court judge, who will consider the U.S. Sentencing Guidelines and other factors.

The announcement was made by Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Todd W. Gee for the Southern District of Mississippi. The IRS Criminal Investigation Division is handling the investigation.

Trial Attorneys Richard J. Hagerman, William M. Montague, and Matthew C. Hicks of the Justice Department’s Tax Division, along with Assistant U.S. Attorney Charles W. Kirkham for the Southern District of Mississippi, are prosecuting the case.

Small Business and Tax Shelters

Small business owners should be especially cautious about tax shelters. These schemes can seem like a way to save money, but they often cross the line into illegal territory. The penalties for participating in such activities can be severe, including hefty fines, repayment of back taxes, and possible prison time. Additionally, being involved in illegal tax shelters can damage a business’s reputation and lead to a loss of trust among customers and partners. Business owners need to consult with reputable tax professionals and ensure that their tax strategies comply with the law to avoid such risks.

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This article, "Indianapolis CPA Pleads Guilty to Illegal Tax Shelter Scheme" was first published on Small Business Trends