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Fake CPA and Partner Busted
FTB News Release September 2009 -The owner of a Glendale tax preparation business and his colleague were arrested on multiple felony charges including elder financial abuse, grand theft, state income tax evasion, and state income tax fraud related to their roles in a bogus securities investment scheme, we announced on August 5, 2009.
Donald R. Ford, of Glendale, and Gregory A. Edwards, of Culver City, were remanded into custody after their arraignment Friday. Ford allegedly persuaded clients, whose trust he had gained from his tax preparation business, to invest in a phony investment scheme. Ford, who posed as a certified public accountant and Edwards allegedly, scammed investors by promising them high rates of return on investments. Instead, Ford and Edwards used the money for their own financial gain.
Ford earned more than $1.3 million in income from the unlawful scheme and Edwards earned more than $961,000 for his role in the scam. Ford allegedly failed to report this income on his 2002 and 2006 state income tax returns and owes the state more than $231,000 in unpaid tax, penalties, and interest. Edwards allegedly failed to report his income on his 2006 state income tax return and owes the state more than $81,000 in unpaid tax. All income is taxable including income from illegal sources.
Ford and Edwards were both booked into the Los Angeles County Jail and are still in custody. Their bail is set at $100,000 each. Their next court appearance has not been set.
The filing of false tax returns and the failure to file tax returns is part of the annual $6.5 billion tax gap facing California. The tax gap is defined as the difference between taxes that are owed and what is paid.
CPAs are licensed by the state. The public can check on the status of a CPA with the California Board of Accountancy atcba.ca.gov or by calling 916.263.3680. The IRS and FTB have recently issued a brochure, FTB Publication 982, How to Select an Income Tax Return Preparer where taxpayers can learn more about choosing a tax professional.
This is a joint investigation between Department of Justice (DOJ) and us. DOJ Deputy Attorney General Edward Skelly is prosecuting this case.
How to Keep Good Records
More IRS Summer Tax Tips
Although most people won’t be filing their tax returns for several months, the dog days of summer are actually a great time to start planning for the tax filing season by ensuring your records are organized. Whether you are an individual taxpayer or a business owner, you can avoid headaches at tax time with good records because they will help you remember transactions you made during the year.
Here are a few things the IRS wants you to know about recordkeeping.
Keeping well-organized records also ensures you can answer questions if your return is selected for examination or prepare a response if you are billed for additional tax. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, you should keep any and all documents that may have an impact on your federal tax return.
Individual taxpayers should usually keep the following records supporting items on their tax returns for at least three years:
Bills
Credit card and other receipts
Invoices
Mileage logs
Canceled, imaged or substitute checks or any other proof of payment
Any other records to support deductions or credits you claim on your return
You should normally keep records relating to property until at least three years after you sell or otherwise dispose of the property. Examples include:
A home purchase or improvement
Stocks and other investments
Individual Retirement Arrangement transactions
Rental property records
If you are a small business owner, you must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later. Examples of important documents business owners should keep Include:
Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC
Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices
Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments
Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks
For more information about recordkeeping, check out IRS Publications 552, Recordkeeping for Individuals, 583, Starting a Business and Keeping Records, and Publication 463, Travel, Entertainment, Gift, and Car Expenses. These publications are available on the IRS Web site, IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Links:
IRS Publication 552, Recordkeeping for Individuals (PDF)
IRS Publication 583, Starting a Business and Keeping Records (PDF)
IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses (PDF)
Stacie's Tax Stuff 