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The United States Department of Justice announced that Michael A. Sandoval, a return preparer located in Las Vegas, Nevada, was sentenced for tax evasion, aiding and assisting in the preparation and filing of a false tax return, and making and subscribing a false tax return. He was sentenced to three years and four months of imprisonment.

Per the press release:

According to court documents and statements made in court, Michael A. Sandoval provided payroll and tax preparation services for individuals and companies through his Las Vegas business Nevada Financial Solutions Inc. (NFS). When two of Sandoval’s clients provided NFS with $471,178 in payments to be forwarded to the Internal Revenue Service (IRS) as money due for their quarterly employment taxes, Sandoval did not provide those payments to the IRS, but instead spent the funds for his personal benefit. At NFS, Sandoval also filed and caused the filing of false individual income tax returns for a substantial number of clients by reporting fraudulent deductions, including false Schedule C business losses, charitable contributions, and state and local tax deductions. These fraudulent deductions caused a tax loss of over $2.8 million. On his own individual tax returns, Sandoval fraudulently understated his income from NFS for the years 2010 through 2017, causing an additional tax loss of $100,138. In total, Sandoval caused a tax loss totaling $3,425,654 to the IRS.

Sandoval previously pleaded guilty to one count each of tax evasion, aiding and assisting in the preparation and filing of a false tax return, and making and subscribing a false tax return.

Per the Tax Division’s manual, the elements of a charge for tax evasion are:

  1. An affirmative act constituting an attempt to evade or defeat a tax or the payment thereof. Sansone v. United States, 380 U.S. 343, 351 (1965); Spies v. United States, 317 U.S. 492, 497-99 (1943).
  2. An additional tax due and owing. Boulware v. United States, 552 U.S. 421, 424 (2008); Sansone v. United States, 380 U.S. 343, 351 (1965); Lawn v. United States, 355 U.S. 339, 361 (1958).
  3. Willfulness. Cheek v. United States, 498 U.S. 192, 193 (1991); United States v. Pomponio, 429 U.S. 10, 12 (1976); United States v. Bishop, 412 U.S. 346, 358-59 (1973); Sansone v. United States, 380 U.S. 343, 351 (1965); Holland v. United States, 348 U.S. 121, 124, 139 (1954).

In regards to aiding and assisting in the preparing and filing of a false tax return, the elements include:

  1. Defendant aided or assisted in, procured, counseled, or advised the preparation or presentation of a document in connection with a matter arising under the internal revenue laws;
  2. The document was false as to a material matter;
  3. The act of the defendant was willful

And finally, the elements of a charge for “making and subscribing a false tax return” are that:

  1. The defendant made and subscribed a return, statement, or other document which was false as to a material matter;
  2. The return, statement, or other document contained a written declaration that it was made under the penalties of perjury;
  3. The defendant did not believe the return, statement, or other document to be true and correct as to every material matter; and
  4. The defendant falsely subscribed to the return, statement, or other document willfully, with the specific intent to violate the law.

USSG 2T4.1, the “Tax Table” provides that tax losses of $3,425,654, before considering other relevant factors or characteristics, falls under Offense Level 22 because it is higher than $1,500,000 and lower than $3,500,000. Without a prior criminal history (Criminal History Category I), the Sentencing Table in the United States Sentencing Guidelines provides for a sentence range between 41 and 51 months for Offense Level 22.

 All persons who are merely charged with crimes are presumed innocent until proven guilty. Furthermore, sentences can vary depending on several factors which vary from person to person. This blog post does not implicitly or explicitly suggest there is basis to the prosecuting agency’s allegations or take any position on the strengths or weaknesses of the government’s positions.

Posted on February 5, 2020 by Benjamin Tu.

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