Texas Woman Pleads Guilty to Income Tax Fraud

A 43-year-old Hankamer, Texas, woman has pleaded guilty to federal income tax fraud totaling almost $2 million, according to a news report.

Holly D. Kirkwood entered a guilty plea to filing a false income tax return in the Eastern District of Texas. According to court documents, Kirkwood worked as an office manager and bookkeeper for a Humble, Texas, painting and sandblasting firm called Rustbusters. As part of her job, she submitted employee expense reimbursement forms to an employee staff leasing and payroll company, Employers One Source Group (EOSG). EOSG then issued reimbursement checks to employees.

The complaint states that in January 2008, Kirkwood began submitting reimbursement forms to EOSG for the purchase of sand and grit that she allegedly produced and that the company purchased for use in its operations. In fact, no such purchases had been made. Kirkwood received numerous reimbursement checks from EOSG totaling $567,332 in 2008, $713,474 in 2009 and $671,014 in 2010.

Because the company’s business grew rapidly during those years thanks to the increase in oil drilling, the fraud was not discovered until a CPA firm conducted an audit. Kirkwood failed to report the unauthorized reimbursements on her personal income tax returns for 2008-2010, which would have incurred additional taxes of $684,364 in total. Instead, she reported only her W-2 wages to the IRS, according to the complaint.

Kirkwood faces a federal prison sentence of up to three years. In addition, she has agreed to pay criminal restitution to the IRS and remains liable for all penalties and interest.

The Cogdell Law Firm is a boutique law firm focusing on large, complex business and criminal financial-related litigation, including white collar criminal defense, securities fraud, health care fraud investigation, criminal appeals and state criminal defense. When results matter most, contact Dan Cogdell at (713) 426-2244 or dan@cogdell-law.com.

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