by OPR taxpayer was a very successful CPA in California. He was in the process of dissolving a marriage. Thus, he set up secret bank accounts to which he diverted several hundreds of thousands in gross receipts from his CPA practice. He never reported these deposits on tax returns, thus, potentially making his divorce financially less painful.
However, before he could amend his tax returns, reporting the gross receipts, he received an audit notice from the IRS for his tax years ended 2005 and 2006. He initially represented himself and the audit quickly spread to 2007. He was interviewed twice by the IRS revenue agent and made very damaging statements.
He then retained Mr. Abajian to represent him. Mr. Abajian quickly prepared a detailed bank deposits analysis of all accounts and was able to carefully come clean on the secret accounts. His thorough work and straight forward approach prevented the case from being referred to the IRS Criminal Investigation group. The IRS revenue agent, however, still demanded that the taxpayer pay a civil fraud penalty of 75% of the underpayment of tax under I.R.C. section 6663.
Mr. Abajian was able to articulate a position that undercut the IRS fraud argument and resolved the case with only a 20% accuracy related negligence penalty under I.R.C. section 6662(a). He was able to demonstrate that the accounts were not secret accounts at all but a good way for the CPA to meet various bankers who then referred him clients. Further, the CPA had been through several previous divorce proceedings resulting in the loss of substantial income and thus, he was not trying to evade tax at all.
Perhaps, more importantly, Mr. Abajian prevented the case from being referred to the IRS Office of Professional Responsibility (OPR). This was as major concern in the case spotted early on by Mr. Abajian because OPR may have suspended the CPA’s ability to practice before the IRS. OPR has been very aggressive in recent years in suspending tax practitioners. The client paid the full tax and negligence penalty and was very happy with the results. The CPA still refers his own clients that are under IRS audit to Abajian Law.
The owner of a popular local sushi restaurant was audited for tax years ended 2001, 2002, 2003 and 2004. The restaurant had no books and records to present to the IRS. Thus, the auditor used various indirect methods to recreate gross receipts that amounted to hundreds of thousands of dollar. Based on the large proposed income adjustments, the agent referred the case to IRS Criminal Investigations (CI) and asserted civil fraud penalties under I.R.C. § 6663 (75% of the proposed tax liability).
Mr. Abajian was able to efficiently get the case out of IRS CI and into the IRS Office of Appeals where he successfully undercut many of the agent’s indirect methods of proving income. He was also able to show that much of the cash must have been used to purchase cost of goods sold and thus, substantially reduced the proposed income adjustments and convinced the appeals office to concede the civil fraud penalties. The owner of the restaurant was extremely happy with the results and now keeps good books and records.
Individual indicted under I.R.C. § 7206(1) for subscribing to a false income tax return based on the allegation he under reported income for multiple years. Indictment includes other non-tax charges. Individual is not a U.S. citizen thus, any potential felony charge will result in possible deportation. Working with team of other attorneys to resolve case.