Ann Quach ran a tax preparation business in Thousand Oaks, California, under the names AQ Financial and A2Z Tax Solutions. From 2011 to 2024, she prepared 1,734 false Form 1040 returns for her clients. Her method was distinctive: she fabricated entire businesses her clients never owned, placed them on Schedule C, and loaded them with fictitious losses to offset the clients’ real W-2 income. She then layered false medical and charitable deductions on top. The result was inflated refunds that kept clients coming back, year after year, while causing multi-million-dollar losses to the U.S. Treasury.

On August 6, 2026, U.S. District Judge Sherilyn Peace Garnett sentenced Quach to 27 months in federal prison and ordered her to pay $6,481,731 in restitution. Prosecutors noted this was not “a brief lapse in judgment” but a years-long scheme in which Quach exploited her tax expertise.

Jason explains how Section 7206(2) works (the federal statute targeting preparers who aid in filing false returns), why the IRS watches Schedule C more closely than any other individual form, how pattern analysis catches high-volume preparer fraud, and what the 1,734 affected clients should do now: amended returns, preparer misconduct affidavits, and why the signature on every Form 1040 is the taxpayer’s responsibility.

Key Takeaways

• Fabricating businesses on client returns is a federal felony under 26 U.S.C. § 7206(2), punishable by up to three years in prison per count.
• Section 7206(2) does not require proof that the client knew the return was false. The preparer’s conduct is independently criminal.
• Schedule C is the most commonly audited form on individual returns because it relies on self-reporting with no third-party verification.
• When a preparer is convicted, the IRS typically reviews the full client list. Affected clients owe back taxes, penalties, and interest on the fabricated deductions.
• Clients who did not know about the fabrication can argue reasonable cause to abate fraud penalties, but they still owe the underlying tax.
• Filing Form 14157 and Form 14157-A (Preparer Fraud or Misconduct Affidavit) tells the IRS you are cooperating and were a victim of preparer misconduct.
• Never sign a return you have not reviewed. Your signature under penalties of perjury is your responsibility, not your preparer’s.

Resources Mentioned

DOJ sentencing announcement (Aug. 6, 2026): https://www.justice.gov/usao-cdca/pr/ventura-county-tax-preparer-sentenced-more-2-years-federal-prison-filing-more-1700

26 U.S.C. § 7206 (Fraud and false statements, including subsection (2) on aiding and assisting)

26 U.S.C. § 7201 (Attempt to evade or defeat tax)

IRS Form 14157 (Complaint: Tax Return Preparer): https://www.irs.gov/forms-pubs/about-form-14157

IRS Form 14157-A (Tax Return Preparer Fraud or Misconduct Affidavit): https://www.irs.gov/forms-pubs/about-form-14157-a

IRS Form 1040-X (Amended U.S. Individual Income Tax Return): https://www.irs.gov/forms-pubs/about-form-1040x

The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Disclaimer

This video is for informational and educational purposes only and does not constitute legal or tax advice. Viewing this video does not create an attorney-client relationship between you and The Law Office of Jason Carr, PLLC. The discussion is based on publicly available information and is not a complete analysis of any person’s legal rights, defenses, tax obligations, or case facts. Any commentary about what a taxpayer, business owner, or advisor “should have done” is general educational discussion only and may not apply to your situation. If you have a specific legal or tax question, consult a qualified attorney or tax professional licensed in your jurisdiction.

Comment Policy

Please do not post confidential, sensitive, or personally identifiable tax information in the comments. We do not provide individualized legal or tax advice in the comments or social media replies.

Steven T. Loo had every advantage: eight commercial properties across Washington and California, a stack of LLCs, and a net worth prosecutors pegged at around $43 million. What he didn't have was any intention of paying his taxes. For years, Loo directed his property managers to send building profits into two bank accounts held by shell companies that had been dormant since 1999, spent the money on himself and his family, and never reported it. He didn't even tell his tax preparer the income existed. Viewed across two decades, his returns claimed he owed nothing and sometimes claimed a refund.

A federal jury convicted Loo of six counts of tax evasion and six counts of filing false returns. In July 2026 he was sentenced to 20 months in prison, a $250,000 fine, and three years of supervised release, after prosecutors sought 51 months and called his motive simple greed.

In this episode, Jason Carr explains the affirmative-act rule that separates a civil audit from a felony under IRC § 7201, why filing a false return under § 7206(1) is its own crime, and how IRS Criminal Investigation used property-management records, bank records, and the preparer's own testimony to close the "honest mistake" door. He also walks through the fork in the road every taxpayer faces when a criminal investigator shows up, and the voluntary-disclosure and compliance path that could have kept this an IRS matter instead of a DOJ case.

Key Takeaways

• Owing tax is civil. Building a structure to hide income is what makes it criminal. Concealment is the line.
• Routing income through shell companies or inactive entities is a classic "affirmative act" of evasion under Spies v. United States.
• Hiding income from your own tax preparer destroys the "my accountant did it" defense and helps prove willfulness.
• IRS-CI builds these cases on paper: third-party property records, bank flows, and the gap between income earned and income reported.
• When a criminal investigator knocks, improvising an explanation creates new evidence. Get counsel and protect privilege.
• If prior years are wrong, voluntary disclosure and amended returns through counsel beat waiting to be caught, especially when you can afford to pay.

Resources Mentioned

• DOJ / U.S. Attorney's Office, W.D. Wash., "Seattle real estate investor sentenced to 20 months in prison for $4.7 million tax evasion scheme" (July 17, 2026): https://www.justice.gov/usao-wdwa/pr/seattle-real-estate-investor-sentenced-20-months-prison-47-million-tax-evasion-scheme
• UnitedStatesv.Loo, No. 2:24-cr-00072 (W.D. Wash.) — indictment returned April 24, 2024.5
• 26 U.S.C. § 7201 — Attempt to evade or defeat tax (felony evasion).
• 26 U.S.C. § 7206(1) — Fraud and false statements / filing a false return.
• Spiesv.UnitedStates, 317 U.S. 492 (1943) — felony evasion requires an affirmative act of concealment, not mere failure to file or pay: https://supreme.justia.com/cases/federal/us/317/492/
• Cheekv.UnitedStates, 498 U.S. 192 (1991) — willfulness and the limits of a good-faith defense: https://supreme.justia.com/cases/federal/us/498/192/
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Disclaimer

This video is for informational and educational purposes only and does not constitute legal or tax advice. Viewing this video does not create an attorney-client relationship between you and The Law Office of Jason Carr, PLLC. The discussion is based on publicly available information and is not a complete analysis of any person’s legal rights, defenses, tax obligations, or case facts. Any commentary about what a taxpayer, business owner, or advisor “should have done” is general educational discussion only and may not apply to your situation. If you have a specific legal or tax question, consult a qualified attorney or tax professional licensed in your jurisdiction.

Comment Policy

Please do not post confidential, sensitive, or personally identifiable tax information in the comments. We do not provide individualized legal or tax advice in the comments or social media replies.

Queen Naja, also known as Renata Winifred Ince and Naja Talibah Zahir, was sentenced to 165 months in prison for conspiracy to commit mail fraud after court records and trial evidence showed a scheme to use a legal trust, false tax documents, and a fraudulent payment to obtain a refund from the IRS.

The IRS issued a Treasury check for $1,010,561.26, and the court later found additional false returns and fraudulent payments tied to refunds issued to Naja’s mother. The court also determined that additional attempted fraudulent payments would have caused another $428,732,324.56 in losses if successful.

Jason explains why trusts are legitimate planning tools, why fake payment documents are criminal evidence, how IRS-CI proved the case through records and interviews, and what taxpayers should do before a questionable refund claim becomes a DOJ case.

Key Takeaways

• A trust is legitimate only when the records, control, income, payments, and tax reporting match reality.
• A refund claim must be based on a real payment, credit, withholding, or overpayment.
• The line between civil tax risk and criminal exposure is often the fabricated document.
• IRS-CI cases are built through records: checks, vouchers, transcripts, returns, bank records, and statements.
• If IRS-CI is involved, privilege matters before the taxpayer tries to explain the facts.
• Large refund claims should be reviewed before filing, especially when trusts, payroll tax vouchers, or credits are involved.

Resources Mentioned

• DOJ case source: https://www.justice.gov/usao-mdal/pr/pennsylvania-woman-sentenced-nearly-14-years-prison-role-2-million-fraud-scheme
• IRS-CI conviction source: https://www.irs.gov/compliance/criminal-investigation/pennsylvania-woman-convicted-in-million-dollar-government-fraud-scheme
• Court record, recommendation on motion to suppress: https://ecf.almd.uscourts.gov/cgi-bin/show_public_doc?2024cr0437-84
• 18 U.S.C. § 1341, mail fraud
• 18 U.S.C. § 1349, attempt and conspiracy
• 26 U.S.C. § 7206, fraud and false statements
• Beckwith v. United States, 425 U.S. 341 (1976): https://www.law.cornell.edu/supremecourt/text/425/341
• Cheek v. United States, 498 U.S. 192 (1991): https://www.law.cornell.edu/supremecourt/text/498/192
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Disclaimer

This video is for informational and educational purposes only and does not constitute legal or tax advice. Viewing this video does not create an attorney-client relationship between you and The Law Office of Jason Carr, PLLC. The discussion is based on publicly available information and is not a complete analysis of any person’s legal rights, defenses, tax obligations, or case facts. Any commentary about what a taxpayer, business owner, or advisor “should have done” is general educational discussion only and may not apply to your situation. If you have a specific legal or tax question, consult a qualified attorney or tax professional licensed in your jurisdiction.

Comment Policy

Please do not post confidential, sensitive, or personally identifiable tax information in the comments. We do not provide individualized legal or tax advice in the comments or social media replies.

Dennis March and Greg March, twin brothers from Berlin, Maryland, each pleaded guilty to tax evasion for concealing income and failing to pay business and individual taxes.

According to their guilty pleas, the brothers owned and controlled business entities and ventures including Elite Marketing Group LLC, Elite MG LLC, and Principal Law Group. The government said they concealed income by arranging payments to a shell entity they controlled, treating those payments as business expenses or costs when they were effectively distributions of income to themselves.

Jason explains how related-party payments can cross the line from planning to concealment, why business expenses need real substance, how IRS-CI follows entity and bank records, and what business owners should do before missing returns and disguised distributions become criminal tax evidence.

KeyTakeaways

• A shell entity does not make owner income disappear.
• Related-party payments need real services, real contracts, reasonable pricing, and clean tax reporting.
• A business expense must be ordinary and necessary, and the label does not override the economic reality.
• Large cash withdrawals, missing returns, and real estate purchases can help prosecutors tell the money-trail story.
• If prior filings are wrong, the cleanup should start before IRS-CI or the DOJ controls the timeline.
• Privilege matters when the facts involve concealed income, shell entities, missing returns, or potential willfulness.

Resources Mentioned

DOJ case source: https://www.justice.gov/usao-md/pr/maryland-brothers-plead-guilty-tax-evasion

IRS Publication 334, business expenses: https://www.irs.gov/publications/p334

IRS online payment agreements: https://www.irs.gov/paymentplans

The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Case Source

• 26 U.S.C. § 7201: Attempt to evade or defeat tax. The statute provides felony penalties for any person who willfully attempts in any manner to evade or defeat tax or payment of tax.
• IRS Criminal Investigation Manual, IRM 9.1.3: Explains § 7201, including the requirement of an affirmative act and examples of conduct that may show an attempt to evade or defeat tax.
• Spiesv.UnitedStates, 317 U.S. 492 (1943): The Supreme Court distinguished passive failure to file or pay from felony evasion and identified examples of conduct that may show an attempt to evade or defeat tax.
• Cheekv.UnitedStates, 498 U.S. 192 (1991): The Supreme Court described willfulness in criminal tax cases as a voluntary, intentional violation of a known legal duty.
• IRS Publication 334, business expenses: The IRS explains that a deductible business expense must be ordinary and necessary, with “ordinary” meaning common and accepted in the business field and “necessary” meaning helpful and appropriate.

Disclaimer

This video is for informational and educational purposes only and does not constitute legal or tax advice. Viewing this video does not create an attorney-client relationship between you and The Law Office of Jason Carr, PLLC. The discussion is based on publicly available information and is not a complete analysis of any person’s legal rights, defenses, tax obligations, or case facts. Any commentary about what a taxpayer, business owner, or advisor “should have done” is general educational discussion only and may not apply to your situation. If you have a specific legal or tax question, consult a qualified attorney or tax professional licensed in your jurisdiction.

Comment Policy

Please do not post confidential, sensitive, or personally identifiable tax information in the comments. We do not provide individualized legal or tax advice in the comments or social media replies.

Carl Mitchell of Crete, Illinois, known professionally as Twista, pleaded guilty on June 24, 2026, to five counts tied to willfully failing to pay income tax for 2019 through 2023.

Court records and statements made in court indicate Mitchell earned income from performances, album sales, streaming, and royalties, and that both the IRS and Mitchell’s accountants repeatedly informed him of his tax debts and obligation to pay. Rather than paying the taxes owed, the government said Mitchell entered into third-party royalty advance agreements knowing the IRS could not levy those funds and made large lifestyle purchases, including at least four luxury vehicles.

Jason explains the line between civil tax debt and criminal exposure, how IRS-CI proves willful failure to pay, why accountant and IRS warnings matter, and what taxpayers with irregular income should do before the IRS problem becomes a DOJ problem.

Key Takeaways

• Tax debt is often a civil collection problem. Warnings, luxury spending, and collection avoidance can change the case. The IRS can follow creative income streams, including performances, streaming, royalties, licensing, and advances.
• Accountant warnings can become powerful willfulness evidence.
• Royalty advances and other financing tools can be legitimate, but the purpose matters when IRS collection is active.
• Taxpayers with irregular income should set aside tax reserves and make estimated payments.
• If the facts include possible intent evidence, privilege should be structured before casual explanations are given.

Resources Mentioned

• IRS-CI case source: https://www.irs.gov/compliance/criminal-investigation/recording-artist-twista-pleads-guilty-to-tax-crimes
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Disclaimer

This video is for informational and educational purposes only and does not constitute legal or tax advice. Viewing this video does not create an attorney-client relationship between you and The Law Office of Jason Carr, PLLC. The discussion is based on publicly available information and is not a complete analysis of any person’s legal rights, defenses, tax obligations, or case facts. Any commentary about what a taxpayer, business owner, or advisor “should have done” is general educational discussion only and may not apply to your situation. If you have a specific legal or tax question, consult a qualified attorney or tax professional licensed in your jurisdiction.

Comment Policy

Please do not post confidential, sensitive, or personally identifiable tax information in the comments. We do not provide individualized legal or tax advice in the comments or social media replies.

A federal jury convicted Marcia Predmore, Roderick Prescott, Suzanne Thompson, and Weldon Wulstein for their roles in an abusive layered trust tax shelter that DOJ says helped business owners evade federal income tax on up to 98 percent of business profits.

The shelter used a business trust, family trust, charitable trust, and private family foundation, and was marketed with the phrase “own nothing, control everything.”

Jason explains how abusive trust structures cross the line, why warnings from attorneys, CPAs, financial professionals, and IRS guidance matter in criminal tax cases, and what legitimate business owners should do instead when they need tax planning, asset protection, estate planning, or charitable giving advice.

Key Takeaways

• A trust is not a device for making taxable income disappear.
• Asset protection and estate planning are legitimate goals, but they need real legal substance and clean tax reporting.
• Personal expenses do not become deductible because they move through a trust.
• Charitable deductions require real charitable transfers, substantiation, and loss of personal control.
• Tax professionals should be cautious when a promoter asks them to prepare returns based on a packaged tax shelter.
• If the plan depends on a slogan like “own nothing, control everything,” get independent tax counsel before signing or paying.

Resources Mentioned

• DOJ case source: https://www.justice.gov/opa/pr/four-abusive-tax-shelter-promoters-found-guilty-40m-nationwide-tax-evasion-scheme
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Disclaimer

This video is for informational and educational purposes only and does not constitute legal or tax advice. Viewing this video does not create an attorney-client relationship between you and The Law Office of Jason Carr, PLLC. The discussion is based on publicly available information and is not a complete analysis of any person’s legal rights, defenses, tax obligations, or case facts. Any commentary about what a taxpayer, business owner, or advisor “should have done” is general educational discussion only and may not apply to your situation. If you have a specific legal or tax question, consult a qualified attorney or tax professional licensed in your jurisdiction.

Comment Policy

Please do not post confidential, sensitive, or personally identifiable tax information in the comments. We do not provide individualized legal or tax advice in the comments or social media replies.