The patriarch of a Rialto tax preparation business was sentenced today in federal court to nine years in prison and must pay more than $15 million after he conspired to defraud the IRS.

United States District Judge Stephen G. Larson ordered Matthew Carl Berry, of Rialto, to pay $15,418,393 in restitution to the Internal Revenue Service, according to IRS officials.

Berry was sentenced in United States District Court in Riverside. He will spend three years on supervised release following his release from prison.

Berry’s daughters, Karen Denise Berry of San Bernardino and Carla Denine Berry of Rialto, as well as Ivan Taylor Johnson of San Bernardino and Valerie Madel Dixon of Rialto were also convicted in the case.

At trial, Matthew Berry was convicted on charges that he conspired with others to defraud the IRS and filed false personal income tax returns for the years 2001, 2002, and 2004.

The IRS will continue to aggressively investigate tax return preparers who knowingly prepare false tax returns, said Leslie P. DeMarco, Special Agent in Charge, IRS Criminal Investigation, Los Angeles Field Office.

“These dishonest preparers undermine the integrity of our tax system and must be held accountable,” DeMarco said. “This nine-year sentence serves as a reminder to all tax return preparers who intentionally prepare fraudulent tax returns. Their disregard for our tax system can lead them to prison.”

The false tax returns prepared by Berry for clients, when combined with the returns prepared by the other defendants, created losses of more than $45,000,000 in tax revenue to the IRS, according to court documents.

Karen Berry and Carla Berry pleaded guilty before trial to various charges including conspiracy to defraud the IRS, aiding and assisting in the preparation of false tax returns and subscribing to a false tax return.

Johnson and Dixon also previously pleaded guilty to charges contained in the indictment.

Court documents state Matthew Berry operated the tax business out of his Rialto residence from 1995 through 2003, according to IRS officials.

In early 2000, the daughters, Karen and Carla Berry, began preparing false income tax returns at the business. Two years later, Johnson and Dixon started preparing false income tax returns as well.

In 2004, the business relocated to a commercial building in Rialto. Matthew Berry and his daughters formed N.C.K. Services, Inc., to operate the tax business.

According to the plea agreements of the Berry sisters, Matthew Berry controlled the cash paid by the tax preparation businesses clients. He typically paid each return preparer weekly, in cash, based upon the number of returns the preparer had prepared during the preceding week.

Further, Berry deposited large amounts of cash received from his clients into bank accounts, in a way to avoid arousing the suspicions of bank employees, the IRS said.

Berry and his co-conspirators also bought cashier’s checks using the profits earned from their fraudulent business in their own names and the names of third-parties. They then deposited those checks into bank accounts which they controlled.

Karen Berry and Carla Berry face a statutory maximum of 11 years in federal prison, fines totaling $750,000, and restitution when sentenced Aug. 31, according to IRS officials.

Johnson was sentenced to nearly three years in federal prison, followed by three years of supervised release. He was also ordered to pay $19,034,901 in restitution to the IRS.

Dixon was sentenced to five years probation, including 10 months home detention, and she was ordered to pay $19,034,901 in restitution to the IRS.

 Tax planning for the efficient transfer of the business cannot be done in a vacuum. There are a multitude of tax considerations to keep in mind when attempting to quantify the tax costs involved in the business transfer.

Certain methods of transfer are less costly than others from a tax perspective. What is an effective plan from an estate or gift tax point of view may not be so efficient when viewed in the context of personal income tax. Additionally, what most benefits the family may not necessarily be the wisest alternative for the business.

Forbes

Most people hate filling out tax forms almost as much as they hate forking over dough to Uncle Sam. In this tax tip:

• Form 1040EZ
• Form 1040A
• Form 1040

That’s why you should use the simplest tax return you can, especially if you’re still filling out your forms by hand.

But choose carefully. While all the personal income tax forms — 1040, 1040A and 1040EZ — are designed to get the appropriate amount of your money to the Internal Revenue Service, the differences in these returns could cost you if you’re not paying attention.

The EZ is the shortest and simplest form, the 1040A is a bit more complex and the long 1040 is the most detailed and potentially difficult. But even though your tax life is simple and straightforward, it might be worth your while to investigate the other two forms. Why? Generally, the longer the form, the more opportunities for tax breaks.

How the EZ could cost you
Take the case of Joe P. Taxpayer. Joe finished college last year and got his first full-time job making $35,000. He’s single, renting and has no investment income. A perfect 1040EZ filer, right? Sure, if you’re Uncle Sam, because Joe will overpay his taxes by using the short form.

Why? The 1040EZ doesn’t offer Joe some valuable tax breaks found on the other two returns.

Joe has a student loan. By filing the 1040A he can subtract from his income up to $2,500 interest he paid on that debt. He can’t do that with the shortest form. Joe also started planning for his retirement by putting $3,000 into a traditional IRA. Because his new employer doesn’t offer a company retirement plan, Joe’s deductible IRA contribution can reduce his taxable income further, but only if he files the longer form.

By choosing the 1040A over the 1040EZ, suddenly Joe owes taxes on just $29,500 instead of on his full $35,000 salary. And he’s dropped into a lower tax bracket — the 15-percent one instead of the 25-percent tier — even before he reduces his taxable income further by taking the personal exemption that every taxpayer is allowed and his standard deduction amount.

So the choice of the 1040A over the 1040EZ saved Joe a bundle. And there are even more tax-saving opportunities found on the long form 1040. They might not apply to Joe, but they could cut your tax bill — if you take the time to look over each of the forms. Here are the basic guidelines for the three individual tax returns.

Form 1040EZ
The simplest IRS form is the Form 1040EZ. And when the IRS doubled the earning limit on filers who used it a couple of years ago, the EZ is now available to even more taxpayers. You can file the 1040EZ return if:

• Your filing status is single or married filing jointly.
• You’re younger than 65; your spouse also must meet the age requirements if you file a joint return. If you or your spouse’s 65th birthday is Jan. 1, then for filing purposes you are considered to have turned 65 last year and therefore cannot file this form.
• You (or your spouse if filing jointly) were not legally blind during the last tax year.
• You have no dependents.
• Your interest income is less than $1,500.
• Your income, or combined incomes for joint filers, is less than $100,000.

The ease of the one-page 1040EZ is appealing, but it limits the number of ways to save on your tax bill.

This shortest personal return restricts filers to claiming just one credit: the earned income tax credit, or EITC, a tax break designed to help out individuals who don’t make much money. And even how you collect the EITC can determine whether you can file the EZ. If you got advance payment of the earned income credit during the year through your employer, then you can’t use this easiest of returns; you’ll have to file the long 1040 or 1040A.

You also need to look at those other two individual tax returns to take advantage of additional income adjustments and tax credits.

Form 1040A
The 1040A form is the next step up the tax-form ladder. As with the EZ form, the earning limit on filers wanting to use the 1040A has increased, so more taxpayers should be able to use it.

Individuals choosing the 1040A can file using any of the five available filing status options: single, married filing jointly or separately, qualifying widow or widower, or head of household. 1040A filers also can claim, in addition to the EITC, several tax credits — the child, additional child, education, dependent care, elderly or disabled and retirement savings credits — that are not available with the EZ.

You also can file Form 1040A if:

President Bush

told congressional leaders privately on Thursday he favors personal income tax rebates and tax breaks for businesses to help avert a recession, officials said, as Federal Reserve Chairman Ben Bernanke joined in calls for an economic stimulus package. Bush spoke with congressional leaders as top House aides worked on an economic rescue package that included more money for food stamp recipients and the unemployed as well as tax rebates and cuts.

Officials described the developments on condition of anonymity until a formal announcement was made, and no further details were immediately available about the size of the rebates or components of the emerging package.

One official said the president did not push for a permanent extension of his 2001 and 2003 tax cuts, many of which are due to expire in 2010. That would eliminate a potential stumbling block to swift action by Congress, since most Democrats oppose making the tax cuts permanent.

Bernanke voiced support for a stimulus package in an appearance before the House Budget Committee, but said it had to be quick and temporary.

“Putting money into the hands of households and firms that would spend it in the near term” is a priority, Bernanke told the committee.

Bush planned to talk about his criteria for the program at the White House Friday morning and later that day in a speech at a manufacturing plant in Frederick, Md.

In his committee appearance, Bernanke said such a plan should be aimed at quickly getting cash into the hands of people, especially those with low and moderate incomes. Bush wasn’t going to spell out any specifics in his remarks, but instead demand that any package be effective, simple and temporary, said White House press secretary Dana Perino.

Perino said that Bush and congressional leaders from both parties consulted via conference call Thursday for about 30 minutes about their plans to work together on growth measures. In the Capitol, House Speaker Nancy Pelosi, D-Calif., has talked of a package totaling $100 billion or more.

The rush to swing behind a stimulus plan underscored the political imperative of responding to a growing concern about the possibility of recession.

Bernanke declined to endorse any particular approach in Capitol Hill appearance, but did say that he preferred one that would act quickly, and not have a long-term adverse impact on the deficit. “The design and implementation of the fiscal program are critically important,” he said.

He spoke as senior aides to House Democrats and Republicans reviewed an emerging plan that included tax rebates for individuals, breaks for businesses and more money to help food stamp recipients and the unemployed. Additional aid to help states complete construction projects was also among the proposals under consideration, according to officials familiar with the discussions. They spoke on condition of anonymity, saying they did not want to pre-empt an eventual announcement.

Additional details were not immediately available.

Perino said conference call showed that both parties basically were in agreement that they needed to do something, and that they needed to cooperate and that it needed to happen quickly.

The White House had said earlier that Bush concluded “some boost is necessary.” Previously, it said the president was only considering only a short-term boost. Perino said Bush was convinced by the daily economic briefings he received while away on a Mideast trip, and she said that he won’t necessarily wait until his State of the Union address at the end of the month to announce specifics.

White House deputy press secretary Tony Fratto said he saw “no obstacle” to a speedy agreement with Congress.

The statements by the White House Thursday marked the first time that it has confirmed that Bush supports government intervention.

“There is reason to be hopeful when the president recognizes there is a problem in the country,” Pelosi said after the conference call with Bush.

Boehner said he was encouraged.

House Majority Leader Steny Hoyer, D-Md., said, “It was useful and I hope it leads to a cooperative effort to come up with something to help stimulate the economy and do so quickly in a bipartisan fashion. He indicated that he wants to work together to get something done.”

Pelosi said that officials “have to spend the money, invest the resources, give the tax relief in a way that again injects demand into the economy, puts it in the hands of those who need it most and into the middle class … so that we can create jobs.”

But Boehner said: “For this bill to become law, it cannot become a Christmas tree. It’s hard to get anything moving within a year, and most of us believe that if we’re going to have a stimulative effect at helping to revive what is becoming a sluggish economy, it needs to happen quickly.”

Fratto said Bush does not believe that a stimulus should be offset — or paid for — by any tax or spending changes elsewhere. Some moderate, deficit-hawk Democrats have pushed for one but it is not expected to be part of a package.

Bernanke forecast slower growth in 2008 but not a recession.

When asked about the potential effect of a fiscal stimulus package totaling around $100 billion, he said the impact could be “significant” and not “window dressing.” Some have floated packages that would range in size from $50 billion to billion to $150 billion — all of which are in the range of “reasonable,” Bernanke said. Rebates can be particularly useful, he added.

“Getting money to people quickly is good, and getting money to low and moderate-income people is good, in the sense of getting bang for buck” because they tend to spend it quickly, Bernanke said. Research shows that the affluent spend some of their rebates, he said.

Temporary expensing and depreciation provisions for businesses also could spur spending, which would help the economy, he said. As it puts together a package, Bernanke added, “Congress might want to consider a diversified mix of elements.”

But he warned: “I hope Congress can resist having a huge list of things” that would lard up legislation and may not do much to help bolster the economy in the short run.

The fragile state of the economy has gripped Wall Street and Main Street and is a rising concern among voters. The situation has galvanized politicians — including those vying to be the next president — and poses the biggest test to Bernanke, who took over the Fed nearly two years ago.

Said House Budget Committee Chairman John Spratt, D-S.C.: “It has become increasingly clear that our economy is slowing down, entering a slump if not a recession.” Rep. Dan Lungren, D-Calif., likened a stimulus package to a “vitamin B-12 shot.”

In his testimony, Bernanke again pledged to aggressively slash a key interest rate as needed to bolster an economy that is weakening under the strains of a severe housing slump and credit crisis.

Many economists believe the Fed will lower its key rate, now at 4.25 percent, by a bold half-percentage point at its next meeting on Jan. 30. Some critics on Wall Street and elsewhere have second-guessed Bernanke for not taking action sooner and more forcefully.

Although Republicans and Democrats differ over what provisions should be part of any economic stimulus package, there’s widespread agreement that tax rebates along the lines of the $300-$600 checks provided in 2001 are likely to be part of the measure. The country last suffered a recession in 2001. This time around, the rebates could be larger. It’s also likely that unemployment benefits will be extended as part of the package.

“To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next 12 months or so,” Bernanke told lawmakers.

He also said that any such package must be temporary to avoid making a big boost to the federal government’s budget deficits and adding to the country’s long-term fiscal burdens.

“The nation faces daunting long-run budget challenges associated with an aging population, rising health care costs and other factors. A fiscal program that increased the structural budget deficit would only make confronting those challenges more difficult,” Bernanke warned.

Before Bernanke spoke, there was yet more downbeat economic and financial news. The Commerce Department said new-home building plunged last year by 24.8 percent, the biggest drop in 27 years.

AP