Arnold C. Libman, a licensed California CPA, has been sentenced to a year and a half in federal prison, and a year of supervised release, after he pleaded guilty to aiding and assisting in the preparation of a false income tax return.

Libman, who practiced in Rosemead, Calif., was also ordered to pay a fine of $250,000 by U.S. District Judge Otis D. Wright II, and to pay $100,000 in restitution to the IRS. Wright also ordered Libman to no longer prepare tax returns.

According to Libman’s plea agreement, from 2002 through 2005, he prepared at least 54 false federal and state income tax returns for at least 20 clients for tax years 2001 through 2004, by including in the returns inflated amounts for charitable contributions, medical expenses, unreimbursed employee and business expenses, and various other deductible items. The 20 returns Libman prepared, understated his clients’ tax liability by approximately $173,346. 

For one client, identified by prosecutors as “T.C.,” Libman falsely reported that T.C. had incurred $32,025 in medical and dental expenses, cash gifts to charity, and unreimbursed employee expenses, when, in fact, he had not incurred such expenses nor made any such gifts.

The majority of CPAs and tax preparers are honest and prepare accurate tax returns for their clients, acknowledged Leslie P. DeMarco, special agent-in-charge for the IRS Criminal Investigation’s Los Angeles Field Office, adding, “Those few dishonest tax professionals who circumvent our tax system risk prosecution.”

Libman is to surrender to the Bureau of Prisons on Dec. 9.