The owner of a ladies’ lingerie store was accused of income tax evasion
– Case Description
The owner of a ladies’ lingerie store was accused of income tax evasion by the revenue agent who referred her case to IRS Criminal Investigation which recommended three separate five-year felonies and a million dollars in penalties and interest. According to IRS the bookkeeper, the CPA, and the client “all pointed at each other.” During a civil audit, the client’s CPA blamed the client, while she was simultaneously representing the client, and the client’s bookkeeper blamed both the CPA and the client. The CPA cooperated with IRS against her client claiming (while simultaneously being paid by the client) it was in the client’s best interest.
The criminal investigation was dropped. Civil penalties were dropped. A suit was filed against the CPA and the bookkeeper. The CPA’s insurance company settled for an undisclosed amount, the weekend before the trial started. (A confidentiality agreement precludes disclosure). A judgment of 2 million dollars was rendered against the bookkeeper in 2018.