By Khalida Sarwari
An accountant from Saratoga has been charged with felony tax fraud for preparing and filing false tax returns for some of his clients.
Jimmy Chen, a 63-year-old certified public accountant, also faces 26 counts of return preparer fraud, according to the Santa Clara County District Attorney’s Office.
Prosecutors are accusing him of creating a scheme whereby he helped at least six of his clients evade income tax and receive personal benefits by establishing private foundations purportedly for charitable purposes that were, in fact, used primarily by the clients for their personal use, including paying for vacation, vehicles, rents and their children’s college tuition.
Prosecutors believe Chen set up private foundations and prepared foundation returns for hundreds of clients. Additionally, it appears Chen charged his clients a fee for setting up their private foundations and for other services relating to the private foundations, including bookkeeping services and preparation of foundation returns, according to the district attorney’s office.
Because private foundations are tax-exempt entities, this allowed the clients to make donations to their private foundations and deduct the amounts as charitable contributions on their personal income tax returns to reduce their income and pay less tax, the district attorney’s office stated.
“Taxes provide funding for essential public services,” Deputy District Attorney Vonda Tracey said. “When someone illegally evades tax obligations, it’s the community that pays the price.”
The investigation was conducted by the Franchise Tax Board.
Chen is scheduled to be arraigned Wednesday, Dec. 13 at the Hall of Justice in San Jose.
Anyone with more information about the case is asked to contact Tracey at 408-792-2580.
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