An Indiana CPA pleaded guilty Thursday to assisting in preparing false tax returns for clients who participated in an illegal tax shelter.
According to court documents and statements, between 2013 and 2022, Jason L. Crace prepared income tax returns for clients who claimed millions of dollars in false deductions for so-called “royalty payments.” However, as Crace knew, these “royalty payments” were merely circular flows of money designed to give the appearance of genuine business expenses.
In reality, tax shelter participants sent their money to bank accounts controlled by scheme promoters, who then returned the money to different bank accounts that the participants controlled. This way, tax shelter participants retained control of the money they transferred while falsely deducting the transfers as business expenses on their tax returns. Participants’ decision regarding how much (and even whether) to pay “royalties” was driven purely by the amount of income they wanted to shelter from the IRS on their tax returns.
In total, Crace’s preparation of false tax returns claiming fraudulent “royalty” deductions caused the IRS to lose at least $2,532,936.
Crace is scheduled to be sentenced on Jan. 14, 2025. He faces a maximum penalty of three years in prison. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
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 made the announcement.
Trial Attorneys Richard J. Hagerman, William M. Montague and Matthew C. Hicks of the Justice Department’s Tax Division and Assistant U.S. Attorney Charles W. Kirkham for the Southern District of Mississippi are prosecuting the case.
IRS Criminal Investigation is investigating the case.
