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An Indianapolis CPA faces up to three years in prison after he pleaded guilty to assisting in the preparation of false tax returns on behalf of clients who participated in an illegal tax shelter.
Jason Crace entered the guilty plea Wednesday in the U.S. District Court for the Southern District of Mississippi, according to the U.S. Department of Justice.
According to court documents and statements made in court, between 2013 and 2022, Crace prepared income tax returns for clients that claimed millions of dollars in false deductions for so-called “royalty payments.”
These “royalty payments” were merely circular flows of money designed to give the appearance of genuine business expenses.
In reality, tax shelter participants sent their money to bank accounts controlled by scheme promoters, who then sent the money right back to different bank accounts that the participants controlled.
In this way, tax shelter participants retained control of the money they transferred, while falsely deducting the transfers as business expenses on their tax returns. Participants’ decision regarding how much to pay “royalties” was driven purely by the amount of income they wanted to shelter from the Internal Revenue Service on their tax returns.
In total, Crace’s preparation of false tax returns claiming fraudulent “royalty” deductions caused a loss to the IRS of at least $2,532,936, according to a DOJ news release.
Crace is scheduled to be sentence on Jan. 14, 2025.
He faces a maximum penalty of three years in prison and also faces a period of supervised release, restitution and monetary penalties.
A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
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