Saturday, February 6, 2010

Collateral Consequences – OPR Suspension

A critical part of federal tax crimes practice is to anticipate and mitigate the collateral consequences of a criminal tax investigation and/or prosecution and/or conviction. We have seen this concern in the pleas for UBS bank accounts where some of the defendants chose to plead to failure to file an FBAR (a 5 year maximum crime) rather than tax perjury (a 3 year maximum crime), with the notion that mere failure to file an FBAR will look better to some licensing and regulatory agencies than tax perjury.  (There are some Sentencing Guideline risks here, but just focus on the cosmetic issue of the "sound" of the crime.)

One of the consequences for tax professionals is OPR disciplinary action that can impede the target’s ability to make a living.

I noticed this news item that OPR has suspended a practitioner for 12 months. His misconduct – preparing false returns and giving false and misleading information to the IRS as follows:
For no legitimate business purpose, Loeser's clients were advised to forward funds from their businesses to two corporations Loeser controlled. The corporations then rebated the funds to his clients. Loeser prepared the clients' books and business tax returns expensing and deducting the entire amounts that were paid to the corporations.

The IRS alleged Loeser violated Circular 230 by giving false or misleading information to the Department of Treasury and the IRS.
Now, as I see it, the crimes indicated by this description include at least tax evasion (§ 7201, including by aiding and abetting), tax perjury (§ 7206(1), at least by aiding and abetting), false documents (§ 7206(2)), tax obstruction (§ 7212(a)), false statements (18 USC § 1001), and Klein defraud conspiracy (18 USC § 371). These are all felonies with maximum sentences of 3 and 5 years. Yet, the release gives no indication that this practitioner was prosecuted.

For these misdeeds, which seem very serious to me, this practitioner punishment received a rather light 12 month suspension.

I just wonder whether, if a person was convicted and sentenced say for 2 years incarceration, he or she could serve the suspension period contemporaneously with the sentence so that at least by the second year, he or she could earn some extra money in prison by preparing returns?

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