Arizona Man Pleads Guilty to Filing False Tax Returns
Kent Ellsworth, a tax preparer from Arizona, has pleaded guilty to two counts of assisting in the preparation of false tax returns for individuals who used an abusive-trust tax shelter to underreport their income and tax liabilities.
According to court documents and statements made in court, Ellsworth operated Ellsworth Stauffer P.C., a return preparation business in Arizona from 2017 to 2023. During that time, he participated in a scheme to defraud the IRS that involved the promotion, sale and implementation of a fraudulent tax shelter.
Ellsworth prepared and filed over 500 false tax returns for approximately 60 clients nationwide who used the tax shelter to conceal income from the IRS and not pay tax. He intentionally caused more than $60 million in income to be fraudulently sheltered from the IRS, resulting in a tax loss to the IRS of approximately $17 million.
The scheme involved clients assigning or ‘donating’ nearly all of their income to sham trusts and a so-called ‘private family foundation’ to create the illusion that the income was not theirs. However, the sham trusts and foundations were nothing more than bank accounts designed to hold funds the clients earned and continued to control.
Ellsworth was paid fees for preparing the returns by the clients participating in the tax shelter. He faces a maximum penalty of three years in prison for each count of preparing and filing false tax returns, as well as a maximum fine of $250,000 and costs of prosecution.
Ellsworth is scheduled to be sentenced on August 14. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The case was investigated by IRS-CI and is being prosecuted by the Tax Division. Ellsworth’s actions are a reminder of the importance of reporting income and paying taxes honestly and fairly.
Mandatory Facts:
Defendant/Respondent: Kent Ellsworth
Criminal Charges: Two counts of assisting in the preparation of false tax returns
City and State: Arizona
Date: 2023
Sentence or Outcome: Pleaded guilty, scheduled for sentencing on August 14
Dollar Amounts: Over $60 million in income was fraudulently sheltered from the IRS, resulting in a tax loss of approximately $17 million
Key Facts
- State: Arizona
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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