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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of Indiana

Tuesday, June 10, 2014

United States Attorney Announces Sentence Of Carmel Man For Tax Evasion

Local man underreported taxes for years resulting in over $500,000 in back taxes owed to the government

INDIANAPOLIS – Joseph H. Hogsett, United States Attorney, announced the conviction and sentencing of a Carmel businessman by U.S. District Judge Jane Magnus-Stinson for his role in a scheme to avoid paying income taxes. Joseph C. Scott, 54, Carmel was sentenced to 6 months in a residential community center for tax evasion.

“This type of fraud affects all Hoosiers. Those who cheat the system cheat their neighbors of taxpayer dollars that could be used to positively impact the community,” Hogsett said.

Scott, a CPA, was the sole owner of JS&A, Inc., located in Indianapolis. In 2001, Scott formed a partnership with KSM Business Services, also of Indianapolis. The new partnership was called KSM Profit Advisors, LLC and was run out of Indianapolis. The partnership provided that Scott’s role, via JS&A was to provide consulting services to all clients and run the business. The business agreement stated that Scott’s company, JS&A, would receive the greatest portion of the fees in return for his role in providing services. From 2005 to 2009, Scott failed to prepare federal tax returns for his company, JS&A.

Because of his failure to file tax returns, Scott was able to manipulate and underreport a substantial portion of his income to avoid paying taxes. During the years he failed to file returns for JS&A, Scott withheld nearly $2 million in income, which resulted in nearly $600,000 in taxes owed for those years.

“Our system is based on trust – not only the trust people have for their government but the trust government has in its citizens,” said Hogsett. “When people violate that trust, it is our job to prosecute them to the full extent of the law.”

Underreporting income is one of the most prevalent ways taxpayers attempt to cheat the system. In this case, Scott was convicted of willfully defrauding the federal government by underreporting his income and using his education and training to funnel his income through a corporation he set up without reporting it to the Internal Revenue Service.

Sharon M. Jackson who prosecuted the case for the government said Scott must serve three years of supervised released, one of which is on electronic monitoring, after completing his sentence.

Updated January 26, 2015