Alternate title: “Ex-CPA with Irish Surname Gets Jail Time on St. Patrick’s Day.”
Authorities say 64-year-old Mark Harmon of Evansville, IN, who was sentenced Wednesday to two years in federal prison on multiple counts of tax evasion, altered client invoices and falsified income on personal tax returns for several years:
Harmon owned and operated Mark Harmon and Company, Certified Public Accountant and Consultants, in Evansville. He was an accountant for over 25 years and a CPA until his license expired in June 2015.
Harmon’s largest accounting client from 2012 through 2015 was a group of three related companies: Pittsburgh Tank and Tower Co., Pittsburgh Tank and Tower Maintenance, and Allstate Tower, Inc. (collectively, Pittsburgh Tank and Tower Group (“PTTG”)). Harmon had been working with those companies for over 25 years by performing accounting and financial audit services.
During the IRS examination, Harmon said he made approximately $75,000 per year in accounting fees from PTTG, and it was his practice to send PTTG an invoice for services rendered, which they always promptly paid. He further stated that PTTG did not issue him a Form 1099 for the tax years at issue because PTTG treated payments to Harmon as expense deductions for professional services. Further examination of Harmon’s accounting books showed approximately $435,000 in purported loans to Harmon from PTTG. Harmon said that PTTG would confirm the loans, and he produced invoices, some of which reflected a “Loan request.”
Agents also requested documents from PTTG. The CFO informed the agents that in the process of gathering the hard-copy invoices from their files, he observed that several invoices stated, “Loan request” and appeared to be altered. Company officials said that PTTG never loaned Harmon any money. Harmon had access to the company’s files during his year-end financial and tax returns preparation services, and they suspected that Harmon physically removed the original invoices from their files and altered the invoice description to state “Loan request.” The company located the original invoices in another format which did not include this description.
After the discrepancy in the invoices was discovered, Harmon admitted that he replaced the invoices in PTTG’s files with the ones matching the “Loan request” invoices. All the $435,000 falsely classified as loans from PTTG to Harmon was professional services income.
The examinations of Harmon’s 2012 through 2015 individual tax returns showed the following:
Calendar year 2012
Reported income of $11,342.00
Actual income approximately $99,138.00
Failed to pay approximately $31,293.00 in taxes
Calendar year 2013
Reported income of $8,622.00
Actual income approximately $167,533.00
Failed to pay approximately $54,211.00 in taxes
Calendar year 2014
Reported income of $25,918.00
Actual income approximately $183,826.00
Failed to pay approximately $59,519.00 in taxes
Calendar year 2015
Reported income of $9,349.00
Actual income approximately $199,512.00
Failed to pay approximately $63,137.00 in taxes
According to authorities, Harmon must pay $208,160 in restitution and will serve one year of supervised release following his imprisonment.