Case on Taxes – Tax Fraud

Case on Taxes – Tax Fraud

Summary of the Robert Brockman Tax Fraud Case

The tax fraud case of Robert Brockman is a tax evasion case that was filed against the C.E.O. of Reynolds and Reynolds Plc in a San Francisco jury on 15^th October 2020. The case is one of the most prominent tax evasion cases witnessed in the United States (1). The case entails Brockman hiding his income from I.R.S. with the aid of Robert F. Smith to avoid taxes using offshore accounts situated in Nevis and Bermuda. To conceal information related to the offshore accounts, Brockman encrypted all communications with a co-conspirator. Brockman also engaged in another fraudulent scheme, gaining over $67.8 million. In the scheme, Smith, the accomplice of Brockman, associated with government institutions to the extent of paying $139 million to settle the probe into the tax in a non-prosecution deal. Over the time of investigation, Smith asserted to have applied the Flash holding and Excelsior to hide earned income from the U.S. Treasury Department and I.R.S.

Smith had earned $67.8 million from the 2010 and 2008 fraud scheme of the organization’s debt safety software. The scheme was successful because there was a constriction for Brockman to purchase securities of the software company without giving any notice as the C.E.O. (2). The case entails an accusation that Brockman’s accomplishment helped him acquire the securities and avoid the tasks as a third party, and eventually hide important information from the seller that could influence investment decisions. The investigation revealed that Brockman conspired with a third party to tamper and change computer and paper evidence, making it impossible to undertake a judicial investigation.

Issues that Led to the Tax Fraud

Various issues contributed to tax fraud. Firstly, the accusation of conspiracy resulted in a violation of 18 U.S.C, evidence destruction and tampering violated 18 U.S.C, two accounts of money concealment laundering that violates 18 U.S.C, accounts of violating 18 U.S.C through wire fraud influencing a financial institution, six counts of failing to file a report regarding foreign bank accounts, and seven accounts that violated the 26 U.S.C. entailing tax evasion.

C.P.A.’s Culpability in Cases of Tax Fraud by Clients

A CPA needs to be aware of fraud accusations and taxpayer exposure. Widiyati et al. state that a person culpable of committing such crimes faces severe consequences, including penalties and imprisonment (3). Therefore, CPAS must offer informative advice to clients to avoid leading them into trouble with the law. For instance, a C.P.A. must advise clients on I.R.S. administrative procedures and tax liabilities. The C.P.A. should be objective in advising the client to ensure no illegalities are committed. In a case where a client’s actions seem to have led to a violation or several irregularities, the C.P.A. should send the client to an attorney with enough experience regarding tax fraud cases. Also, the C.P.A. should avoid engaging in legal matters if they are not attorneys.

Ways a Tax Preparer Can Detect Signs of Tax Fraud

Various ways can be used to identify cases of tax fraud. One way entails a case where personal expenses are reported as company or business expenses. Notably, this is a common aspect identified in tax fraud cases. Another way tax fraud can be detected is the concealment of money in various bank accounts, including foreign accounts, such as the case described above. Lastly, accounting irregularities can point to tax fraud. Accounting irregularities can cover aspects such as false accounting book entries and deductions and overstatements in the preparation of payroll accounts.

Sources

Kemsley, D., Kemsley, S. A. and Morgan, F. T. 2023. Tax evasion on lawful income: is it a form of money laundering? https://doi.org/10.1108/JFC-11-2022-0268

D’avino, C. 2023. Counteracting offshore tax evasion: Evidence from the foreign account tax compliance act. p. 106126. https://doi.org/10.1016/j.irle.2023.106126

Widiyati, D., Valdiansyah, R.H., Meidijati, M. and Hendra, H. 2021. The Role of Public Accountants in Fraud Prevention and Detection in the Taxation Sector during Covid-19. pp.70-82. https://doi.org/10.52970/grar.v1i2.77

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Overview

Federal prosecutors have charged Texas billionaire, Robert Brockman, with a $2 billion tax fraud scheme in what they say is the largest such case against an American. Before attempting this assignment, review the case, CEO of Multibillion-Dollar Software Company Indicted for Largest-Ever Tax Evasion as Private Equity CEO Makes NPA to Cooperate in the Case.

Instructions

Write a 2–3 page paper about this tax fraud case, in which you:

1. 1. Summarize the Robert Brockman tax fraud case.
   2. Evaluate the issues that led to the tax fraud.
   3. Analyze a CPA’s culpability in cases of tax fraud by clients, regardless of whether they had knowledge of the fraud.
   4. Evaluate ways a tax preparer can detect signs of tax fraud in order to prevent future tax fraud.
   5. Use three sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment. For help with research, writing, and citation, access the library, or review library guides.

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is:

1. • Evaluate a business tax scandal, including income taxes, to determine weaknesses that could lead to future problems.