A trust can be a legitimate estate planning tool. In this case, prosecutors said purported trusts became the vehicle for a multimillion-dollar tax refund fraud scheme.

Brandon Hunt, his father David Hunt, his twin brother Baylon Hunt, and his half-brother Corey Burt were convicted at trial for their roles in a scheme to file false tax returns in the names of trusts they controlled. Prosecutors said the defendants sought more than $8.5 million in refunds, received over $1.7 million from the IRS, and used the proceeds to buy luxury goods, furniture, cryptocurrency, a Cadillac Escalade, and a house in Mississippi.

Jason explains why trusts do not create refunds by magic, how IRS warning letters can become a major aggravating fact, and what taxpayers should do when a trust, refund claim, or prior filing starts to look indefensible.

Key Takeaways

• A trust is a legal structure, not a refund generator.
• A refund claim must be supported by real income, real payments, real deductions, and real documentation.
• IRS warning letters should be treated as an escalation point, not background noise.
• Continuing after a warning letter can turn a bad filing position into a much more serious case.
• Tax professionals should slow down when a client presents a trust strategy that produces an unusually large refund.
• If prior returns are wrong, the correct path depends on willfulness, timing, and whether the IRS has already identified the issue.
• Voluntary disclosure may help address willful noncompliance only if the disclosure is truthful, timely, and complete, and made before key IRS enforcement triggers occur.

Case Source:

• DOJ press release: Final Defendant Sentenced to Prison in Multimillion Dollar Tax Refund Fraud Scheme
• IRS-CI press release: Final defendant sentenced to prison in multimillion dollar tax refund fraud scheme

Resources Mentioned

• DOJ case source: https://www.justice.gov/opa/pr/final-defendant-sentenced-prison-multimillion-dollar-tax-refund-fraud-scheme
• IRS-CI case source: https://www.irs.gov/compliance/criminal-investigation/final-defendant-sentenced-to-prison-in-multimillion-dollar-tax-refund-fraud-scheme
• IRS Form 1041: https://www.irs.gov/forms-pubs/about-form-1041
• IRS Voluntary Disclosure Practice: https://www.irs.gov/compliance/criminal-investigation/irs-criminal-investigation-voluntary-disclosure-practice
• Learn more: https://carrtaxlaw.com

John Kungu owned a successful business, Advanced Nursing Care, in Townsend, Delaware. He also owed the IRS nearly $1.2 million, and he decided to lie his way out of it.

In this episode of Final Notice, tax attorney Jason Carr breaks down how Kungu ran his scheme on two fronts: filing false personal and corporate returns that disguised hundreds of thousands of dollars in personal spending as business expenses, then submitting multiple false sworn statements to the IRS during collections claiming he couldn't pay.

The defining moment: Kungu offered to settle his entire tax debt for $35,000, said he'd need a loan to do it, and was holding more than $5.1 million in hidden accounts the whole time. He was sentenced to 18 months in federal prison, three years of supervised release, a $75,000 fine, and full restitution of $1,186,573.62.

Jason explains the legitimate tools Kungu ignored: the Offer in Compromise, installment agreements, currently-not-collectible status, penalty abatement, and real tax planning, and why every one of them starts with honest, fully disclosed financials.

This episode is for business owners, taxpayers facing IRS collections, bookkeepers, enrolled agents, CPAs, and tax preparers who want to understand exactly where an unpaid tax bill turns into a criminal case.

Key Takeaways

• The IRS will settle a tax debt for less than you owe, but only through an Offer in Compromise built on fully disclosed, honest financials.
• Lying on a sworn collection statement is what converts a civil collections problem into a federal criminal case.
• Running personal spending through your business as "expenses" is not a deduction. It is evidence.
• Hiding records from your own bookkeeper or tax preparer is the moment to call a tax attorney, not to dig deeper.
• What you tell a tax attorney is privileged. What you tell your bookkeeper is not.
• A large unpaid tax bill is a solvable problem. The solution is disclosure plus strategy, never a sworn lie.

Resources Mentioned

• DOJ / IRS-CI case source: https://www.justice.gov/usao-de/pr/delaware-business-owner-sentenced-18-months-federal-prison-multi-year-tax-evasion-scheme
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com

Congress created the Employee Retention Credit to help struggling businesses keep workers on payroll during the pandemic. Candies Goode-McCoy of Las Vegas treated it like an ATM.

From approximately June 2022 through September 2023, Goode-McCoy conspired with others to file more than 1,200 tax returns for her own businesses and for others, claiming the Employee Retention Credit and the paid sick and family leave credit, and seeking refunds totaling more than $98 million. The IRS paid out roughly $33 million before the scheme was stopped. Goode-McCoy personally received over $1.3 million in fraudulent refunds and about $800,000 more from clients, spending the proceeds on luxury cars, vacations, and gambling.

She pleaded guilty to one count of conspiracy to defraud the government with respect to claims and was sentenced to 54 months in prison, three years of supervised release, and more than $26 million in restitution to the IRS.

Jason explains why refundable credits like the ERC draw intense IRS scrutiny, how high-volume claims create unmistakable data patterns, and what a business should do if it already claimed an ERC it can no longer defend, including the ERC Voluntary Disclosure Program, claim withdrawal, amended returns, audit defense, and penalty relief.

This episode is for taxpayers, small business owners, tax preparers, bookkeepers, enrolled agents, CPAs, and anyone trying to understand where an aggressive credit claim crosses the line into criminal tax fraud.

Key Takeaways:

• A refundable credit is the most heavily scrutinized money in the tax code. A refund that sounds too good to be true usually is.
• The ERC was a legitimate program with specific eligibility rules: a government-ordered shutdown or a significant decline in gross receipts in qualifying periods.
• High-volume claims with repeated credits create detectable patterns. The IRS shifted most of its exam staff to audit ERC claims.
• Lifestyle that doesn't match reported income is a classic red flag investigators follow every time.
• Tax preparers should build practices on eligibility analysis, documentation, and defensible positions, not refund size.
• If you already claimed a credit you can't support, voluntary correction through the ERC Voluntary Disclosure Program or claim withdrawal is far better than waiting for the IRS to find it.
• The goal is to keep the matter in the civil tax resolution lane, through amended returns, audit defense, and penalty relief, before it becomes a criminal case.

Resources Mentioned:

• DOJ sentencing release: Business Owner Sentenced to Over Four Years in Prison for $100M COVID-19 Tax Credit Scheme
• DOJ District of Nevada release: Business Owner Sentenced to Over Four Years in Prison for $100M COVID-19 Tax Credit Scheme
• DOJ guilty plea release: Nevada Woman Pleads Guilty to Fraudulently Seeking Nearly $100M in COVID-19 Employment Tax Credits
• Related co-conspirator (IRS-CI): Nevada businesswoman pleads guilty to multimillion dollar scheme to fraudulently claim COVID-19 tax credits
• The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com