Indianapolis CPA pleads guilty to hiding clients money from IRS

INDIANAPOLIS — An Indianapolis-based Certified Public Accountant (CPA) pleaded guilty in federal court to filing false tax returns for his clients and participating in an illegal tax shelter that cost the IRS millions.

Jason L. Crace, the founder of Crace.CPA, pleaded guilty in federal court on Wednesday to participating in an illegal tax shelter. He will be sentenced on Jan. 14, 2025, and faces up to three years in prison.

According to the United States Department of Justice, Crace helped clients in Mississippi and elsewhere file false business deductions for so-called “royalty payments” in the amount of millions of dollars between the years of 2013 and 2022.

The DOJ argued that Crace knew these “royalty payments” were circular flows of money purposely designed to give the appearance of genuine business expenses.

“In reality, tax shelter participants sent their money to bank accounts controlled by scheme promoters, who then sent the money right back to different bank accounts that the participants controlled,” the DOJ said. “In this way, tax shelter participants retained control of the money they transferred, while falsely deducting the transfers as business expenses on their tax returns.”

In total, the DOJ said Crace’s preparation of false tax returns claiming fraudulent “royalty” deductions caused a loss of at least $2,532,936 to the IRS.

In addition to facing up to three years in federal prison, Crace also faces restitution and monetary penalties.