We are committed to closing California's $6.5 billion tax gap, defined as the difference between tax that is owed and tax that is paid. Our special agents work cooperatively with law enforcement agencies throughout California to uncover illegal behaviors that contribute to the tax gap. These include underreporting income, overstating deductions, failing to file returns, failing to pay taxes due, and making illegal cash payments to employees.
Tax fraud is not a victimless crime. You can report suspected tax fraud by calling FTB at (800) 540-3453.
Cases prosecuted in the last month are described below.
San Jose couple sentenced for felony tax evasion
On August 4, 2006, the State Board of Equalization (BOE) announced the sentencing of Larry and Patricia Stenshoel after the couple was convicted of two felony counts of sales tax evasion, three felony counts of state income tax evasion, and one count of grand theft.
Larry Stenshoel was sentenced to two years in state prison. Patricia Stenshoel was sentenced to three years probation and 1,440 hours of community service. Additionally, Larry and Patricia Stenshoel were ordered to pay remaining restitution of $544,834 to the BOE and $264,246 to the FTB. They had initially paid $500,000 toward their tax debt. The case was prosecuted by the Santa Clara County District Attorney's Office.
Larry Stenshoel, 76, and his wife, Patricia Stenshoel, 72, operated the Cade Company, a San Jose waterproofing business, where they charged and collected sales tax from customers without properly paying the tax to the BOE. The joint investigation conducted by the BOE and the FTB found the Stenshoels intentionally failed to report and pay more than $430,000 in sales tax from October 1996 to December 1997 and more than $60,000 in State income taxes between 1994 and 1996.
The Stenshoels fled California after charges were filed against them in April 2001. Larry Stenshoel was extradited from the state of Texas in June 2005, and Patricia Stenshoel later surrendered to authorities in February 2006.
Orange county man convicted for unpaid income taxes
An Orange County man awaits sentencing after he was found guilty on five counts of felony state income tax evasion.
David D. Detar, 50, an independent salesman who worked for numerous businesses in Orange County, was convicted of tax evasion for failure to file state income tax returns for 1998 through 2002. At his trial, six of his former employers testified they issued Form 1099s to Detar. After the prosecutor submitted 35 pieces of evidence Orange County Superior Court Judge Byron McMillan addressed Detar and said, "I can't find one reason to not find you guilty."
Detar failed to report more than $207,000 in income for 1998 though 2002 state income tax returns, and owes the FTB more than $16,000 in unpaid tax, penalties, interest, plus the cost of the investigation.
Detar faces a maximum sentence of 15 years in state prison. This was a joint case with the Orange County District Attorney's Office, and the FTB.
Illegal cigarette sales burn San Gabriel woman
A San Gabriel woman, involved in selling illegal cigarettes, was sentenced to three years in state prison on filing false state income tax returns.
Nancy N. La, 56, failed to report more than $2 million in income on her jointly filed 2001 and 2002 state income tax returns, and owes the FTB more than $427,000 in unpaid tax, penalties, interest, and the cost of the investigation. Forensic auditors examined the defendant's bank records and business financial records to determine how much tax was owed.
The total amount of restitution will be determined at La's restitution hearing on November 13, 2006.