John Kungu owned a successful business, Advanced Nursing Care, in Townsend, Delaware. He also owed the IRS nearly $1.2 million, and he decided to lie his way out of it.

In this episode of Final Notice, tax attorney Jason Carr breaks down how Kungu ran his scheme on two fronts: filing false personal and corporate returns that disguised hundreds of thousands of dollars in personal spending as business expenses, then submitting multiple false sworn statements to the IRS during collections claiming he couldn't pay.

The defining moment: Kungu offered to settle his entire tax debt for $35,000, said he'd need a loan to do it, and was holding more than $5.1 million in hidden accounts the whole time. He was sentenced to 18 months in federal prison, three years of supervised release, a $75,000 fine, and full restitution of $1,186,573.62.

Jason explains the legitimate tools Kungu ignored: the Offer in Compromise, installment agreements, currently-not-collectible status, penalty abatement, and real tax planning, and why every one of them starts with honest, fully disclosed financials.

This episode is for business owners, taxpayers facing IRS collections, bookkeepers, enrolled agents, CPAs, and tax preparers who want to understand exactly where an unpaid tax bill turns into a criminal case.

Key Takeaways

• The IRS will settle a tax debt for less than you owe, but only through an Offer in Compromise built on fully disclosed, honest financials.
• Lying on a sworn collection statement is what converts a civil collections problem into a federal criminal case.
• Running personal spending through your business as "expenses" is not a deduction. It is evidence.
• Hiding records from your own bookkeeper or tax preparer is the moment to call a tax attorney, not to dig deeper.
• What you tell a tax attorney is privileged. What you tell your bookkeeper is not.
• A large unpaid tax bill is a solvable problem. The solution is disclosure plus strategy, never a sworn lie.

Resources Mentioned

• DOJ / IRS-CI case source: https://www.justice.gov/usao-de/pr/delaware-business-owner-sentenced-18-months-federal-prison-multi-year-tax-evasion-scheme
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Congress created the Employee Retention Credit to help struggling businesses keep workers on payroll during the pandemic. Candies Goode-McCoy of Las Vegas treated it like an ATM.

From approximately June 2022 through September 2023, Goode-McCoy conspired with others to file more than 1,200 tax returns for her own businesses and for others, claiming the Employee Retention Credit and the paid sick and family leave credit, and seeking refunds totaling more than $98 million. The IRS paid out roughly $33 million before the scheme was stopped. Goode-McCoy personally received over $1.3 million in fraudulent refunds and about $800,000 more from clients, spending the proceeds on luxury cars, vacations, and gambling.

She pleaded guilty to one count of conspiracy to defraud the government with respect to claims and was sentenced to 54 months in prison, three years of supervised release, and more than $26 million in restitution to the IRS.

Jason explains why refundable credits like the ERC draw intense IRS scrutiny, how high-volume claims create unmistakable data patterns, and what a business should do if it already claimed an ERC it can no longer defend, including the ERC Voluntary Disclosure Program, claim withdrawal, amended returns, audit defense, and penalty relief.

This episode is for taxpayers, small business owners, tax preparers, bookkeepers, enrolled agents, CPAs, and anyone trying to understand where an aggressive credit claim crosses the line into criminal tax fraud.

Key Takeaways:

• A refundable credit is the most heavily scrutinized money in the tax code. A refund that sounds too good to be true usually is.
• The ERC was a legitimate program with specific eligibility rules: a government-ordered shutdown or a significant decline in gross receipts in qualifying periods.
• High-volume claims with repeated credits create detectable patterns. The IRS shifted most of its exam staff to audit ERC claims.
• Lifestyle that doesn't match reported income is a classic red flag investigators follow every time.
• Tax preparers should build practices on eligibility analysis, documentation, and defensible positions, not refund size.
• If you already claimed a credit you can't support, voluntary correction through the ERC Voluntary Disclosure Program or claim withdrawal is far better than waiting for the IRS to find it.
• The goal is to keep the matter in the civil tax resolution lane, through amended returns, audit defense, and penalty relief, before it becomes a criminal case.

Resources Mentioned:

• DOJ sentencing release: Business Owner Sentenced to Over Four Years in Prison for $100M COVID-19 Tax Credit Scheme
• DOJ District of Nevada release: Business Owner Sentenced to Over Four Years in Prison for $100M COVID-19 Tax Credit Scheme
• DOJ guilty plea release: Nevada Woman Pleads Guilty to Fraudulently Seeking Nearly $100M in COVID-19 Employment Tax Credits
• Related co-conspirator (IRS-CI): Nevada businesswoman pleads guilty to multimillion dollar scheme to fraudulently claim COVID-19 tax credits
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Dr. Pankaj Merchia controlled several sleep medicine companies and, on paper, looked like a Harvard-educated success story. Federal prosecutors said he was running a shell game.

From 2017 to 2019, Merchia billed insurers millions for sleep apnea machines former patients hadn't used in years, some of which had already been returned, and used the proceeds to buy a $2.1 million home. He billed an insurer over $390,000 for treating his own brother, and when told he couldn't, set up a new business under a nominee to keep the payments flowing.

The tax scheme used the same playbook. From 2009 to 2019, Merchia hid more than $6.5 million in income by claiming his businesses were owned by a co-conspirator, fabricating a 2008 "sale" backed by a $30 million appraisal, and claiming roughly $2 million in deductions a year for fifteen years. When the IRS audited, he produced a backdated promissory note the metadata exposed and claimed he earned just $1 a year, "much like the founders of Google and AOL."

After a ten-day trial in which he represented himself, a Boston jury deliberated about four hours and convicted him on all counts. Jason explains where legitimate succession planning, Section 197 amortization, entity structuring, and the IRS Voluntary Disclosure Practice could have solved Merchia's real problems, and why lying during an audit, not the audit itself, is what turns an IRS case into a DOJ case.

This episode is for physicians, business owners, CPAs, enrolled agents, and tax professionals who want to understand exactly where aggressive planning crosses into criminal tax fraud.

Key Takeaways:

• You cannot just put a "stand-in" or nominee owner on a business to avoid taxes while keeping total control. The IRS focuses on who actually signs the checks, runs the show, and spends the money (like paying personal credit cards and student loans directly from business accounts).
• A messy or aggressive audit is usually a civil issue settled with back taxes, penalties, and interest. What turns an audit into a federal criminal indictment is lying, inventing stories (like the "Google founder" defense), and feeding fabricated documents to investigators.
• Modern tax fraud is easily exposed by digital fingerprints. Backdating a promissory note or a sales agreement to make a transaction look old will fail because file metadata reveals exactly when the document was actually created.
• If you are exposed during an audit, the goal is containment, not doubling down on the lie. Utilizing the IRS Voluntary Disclosure Practice or filing amended returns can keep a case civil. Fabricating new documents completely destroys that option.
• Strategies like asset protection, income shifting, and Section 197 amortization deductions are perfectly legal. However, they require real ownership transfers, actual transactions, and verifiable records—not manufactured forms with zero substance.
• Self-representation in a federal fraud trial rarely ends well. Taxpayers facing serious audits need to bring in defense counsel early to protect themselves with attorney-client privilege and let an objective expert make the cold strategic calls.

Resources Mentioned:

• IRS-CI press release: Former Brookline doctor convicted of health care fraud and tax fraud
• DOJ press release: Doctor Convicted at Trial for Defrauding IRS and Health Care Insurers
• DOJ (District of Massachusetts): Former Brookline Doctor Convicted of Health Care Fraud and Tax Fraud
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com