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Fraud Indictment Against Texas Attorney Who Promoted Illegal Tax Shelters
Fraud Indictment Against Texas Attorney Who Allegedly Promoted Illegal Tax Shelters
In recent years, the Internal Revenue Service and Department of Justice have focused extensively on bringing down tax professionals (Attorneys, CPAs, Enrolled Agents, Accountants, etc.) for promoting illegal or allegedly illegal tax scams and shelters. Recently, an indictment was returned by a federal grand jury against a Texas lawyer who the US government believes was promoting a fraudulent tax shelter that allowed high-income clients to avoid tax by claiming false deductions. The allegations against the attorney and the co-conspirators are that they promoted this tax scheme by manipulating false expenses through various shell companies — which then allowed high-income earners to recoup funds that were funneled through these companies. Based on the government’s allegations, they believe that the tax attorneys’ scheme was very sophisticated and involved false business valuation reports, sham contractual transactions and other various fake invoices leading to tax fraud.
Dallas Attorney Charged with Promoting Illegal Tax Shelter
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An indictment returned by a federal grand jury in Dallas was unsealed today charging a Texas lawyer with wire fraud, conspiracy to commit wire fraud, and helping his clients file false tax returns based on an illegal tax shelter that he promoted.
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According to the indictment, from approximately 2012 to 2021 Joseph Garza, of Dallas, promoted a tax shelter that allowed high-income clients to claim fraudulent tax deductions that reduced the taxes they owed to the IRS. Garza and his co-conspirators allegedly directed the clients to transfer funds into shell companies, then returned this money to the clients, untaxed, for their own personal use. To conceal the circular flow of funds, Garza and the co-conspirators allegedly commissioned fictitious business valuation reports, created invoices for fake business expenses, and drafted sham contractual agreements. According to the indictment, Garza’s scheme allowed clients to hide approximately $1 billion dollars from the IRS and caused a total tax loss to the IRS exceeding $200 million.
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Garza is scheduled to make his initial appearance tomorrow before U.S. Magistrate Judge Irma Ramirez of the U.S. District Court for the Northern District of Texas. If convicted, he faces a maximum penalty of 20 years in prison for each of the 18 counts of wire fraud, 20 years in prison for conspiracy to commit wire fraud, and three years in prison for each of 22 counts of aiding and assisting in the filing of false federal income tax returns. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
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*An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law
Current Year vs Prior Year Non-Compliance
Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist that specializes exclusively in these types of offshore disclosure matters.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.
Contact our firm today for assistance.