Indy CPA gets 3 years for helping clients claim false business deductions, costing the IRS millions

INDIANAPOLIS — An Indianapolis-based Certified Public Accountant (CPA) was sentenced to three years in prison after pleading guilty to filing false tax returns for clients.

According to the United States Department of Justice, Jason Crace was sentenced on Monday after previously pleading guilty in federal court

to participating in an illegal tax shelter.

Crace admitted to helping clients based in Mississippi and elsewhere file false business deductions for “royalty payments” worth millions of dollars, according to the DOJ. Investigators determined that this occurred between 2013 and 2022.

“These ‘royalty payments’ were merely circular flows of money designed to give the appearance of genuine business expenses,” the DOJ said.

The scheme reportedly involved having clients send money to bank accounts operated by the tax shelter participants, who would turn around and send the money back to a different bank account clients had access to.

This enabled the participants to regain the money they initially transferred while deducting the transfers as business expenses on their tax returns.

The DOJ said Crace led to the IRS recording losses of at least $2,532,936.