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Justice News

Department of Justice
U.S. Attorney’s Office
Middle District of Pennsylvania

FOR IMMEDIATE RELEASE
Tuesday, March 13, 2018

New Cumberland Businessman Sentenced To One Year Probation And Home Confinement For Filing False Tax Return

HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania announced that Michael Powers, age 53, of New Cumberland, Pennsylvania, was sentenced today by United States District Court Judge John E. Jones, III, to one year probation with the condition that he spend four months on monitored home detention for filing a false Federal Income Tax Return pertaining to tax year 2010.

According to United States Attorney David J. Freed, Powers who owns and operates Powers Auto Repair in New Cumberland, pleaded guilty on September 11, 2017, to understating his true income by $238,381 on his 2010 income tax return. The tax owed on that unreported income amounted to $42,774.  Under the terms of his plea agreement, Powers will make restitution to the Internal Revenue Service (IRS) in that amount plus another $26,198 for unpaid taxes owed on unreported income of $208,979 for tax year 2012.  Thus, the total loss to the IRS as a result of Powers’ underreporting of income was $68,972.

Judge Jones also ordered Power’s restitution in the amount of $68,972 to be paid in no less than monthly payments of $500.

The IRS investigation of Powers began after the IRS received a Form 1099-K indicating Powers Auto Repair had significantly more gross receipts than what Powers reported on his 2011 income tax return. A Form 1099-K is a reporting document filed by entities that process credit card payments on behalf of businesses.

As a result, the IRS obtained Powers’ bank records, which showed that Powers established two accounts - a business account and a personal account at the same bank. Powers deposited all of the cash and all of the checks he received from his customers into the business bank account, and all of his credit card income into his personal account.  However, Powers only reported the income in his business account as income on his 2010 and 2012 tax returns.

The case was investigated by the Harrisburg Office of the Internal Revenue Service, Criminal Investigation.  Assistant United States Attorney Kim Douglas Daniel prosecuted the case. 

 

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Topic(s): 
Tax
Updated March 13, 2018