John the Barber timely filed both his barber shop’s Form 1120-S and his individual 1040 for the 2016 tax year. During 2016, John received cash payments from customers at his shop. John recorded these cash payments, as well as all other transactions, in one set of books. ohn also had a second set of books, which made no note of any of the cash payments received. When John’s tax preparer asked John for the corporate records for the barber shop for 2016, John only gave the preparer the second set of books (which do not note the cash payments). Both returns are thereafter filed, with no mention of the cash payments. John’s tax preparer was totally unaware of the cash payments.In addition to the above, John has a Canadian bank account from his childhood. As a result of this bank account, John has a requirement to check the box “yes” on Part III of his Schedule B (indicating ownership in a foreign account). When asked about any foreign accounts by his preparer, John forgets about the Canandian account entirely and, as a result, the 1040 is incorrectly filled out by his preparer.
Pretend you are a prosecutor. Based only on the two crimes, can John be charged with either?
Both?
Can his tax preparer be charged with either?
