TUCSON, AZ – A former Pima County Justice of the Peace, Keith Allan Bee, pleaded guilty last week to filling a false income tax return. Bee claimed that various vehicles were business expenses for his bus company, Bee Line Bus Transportation, LLC.
Bee was indicted on three counts of filing false tax returns during the tax years 2011, 2012 and 2013. In his plea agreement, Bee admitted to the following:
I agree that the following facts accurately describe my conduct in connection the offense to which I am pleading guilty, and that if this matter were to proceed to trial the government could prove the elements of the offense beyond a reasonable doubt on the following facts:
During the period from 2011 through 2013, I was the Chief Executive Officer for Bee Line Bus Transportation, LLC, an Arizona limited liability corporation.
The principal business for this company was transportation, primarily bus transportation. During this time period, for tax purposes, I treated Bee Line as a sole proprietorship and hence the net profit or loss from the company flowed directly to me as owner. I knew during this time period I was required to report any income earned and expenses incurred by the corporation on Schedule C to my Form 1040 Individual Tax Returns filed with the Internal Revenue Service (“IRS”).
I also knew during this time period I was required to pay taxes to the IRS on Bee Line’s net profit.
During each tax year from 2011 through 2013, in order to reduce Bee Line’s net profit and to therefore reduce my tax liability, I knowingly and willfully overstated Bee Line’s total expenses listed on Schedule C to my Form 1040 in a material amount because I included in those figures personal expenses and the depreciation of personal assets, including payments for and the depreciation of automobiles that were not used in the ordinary course and scope of my business.
I provided my tax preparer a schedule of assets, including automobiles, for use in depreciating those assets. Included in that schedule were automobiles that I knew were not used for business purposes. The tax preparer then included payments for and the depreciation of these vehicles as expenses of Bee Line on Schedule C to my Form 1040. Examples of some of these vehicles that were falsely characterized as vehicles used in the ordinary course of business were several Ford Mustangs, a 2008 Chevrolet Corvette, and a 2003 Porsche.
By including personal expenses and the depreciation of personal assets as expenses of Bee Line in the information provided to my tax preparer, I knowingly and willfully caused to be made and filed on my behalf a tax return for the year 2013 that contained false information as to a material matter, because such information had a natural tendency to influence, or was capable of influencing, the decisions or activities of the Internal Revenue Service. This return was filed after I signed a written declaration subject to the penalties of perjury that the return was true, correct, and complete to the best of my knowledge and belief.
I agree that the government could prove that my 2013 Form 1040 understated my tax due and owing because I had knowingly and willfully included personal expenses and the depreciation of personal assets in the expenses of Bee Line listed on Schedule C. I further agree, as to the relevant conduct, that the government could prove that I engaged in similar activity for tax years 2011 and 2012, resulting in a total tax loss over these three years of approximately $214,414.
By agreeing to this factual basis, I am not acknowledging that each and every expense resulting in the tax loss described in this plea agreement would warrant an assessment for civil fraud penalty. However, I would agree that the falsely depreciated automobile expenses relating to several Mustangs, a Corvette, and a Porsche would qualify for the civil fraud penalty.
In sum, I acknowledge that I filed a false tax return for calendar year 2013 in violation of Section 7206(1) of Title 26 of the United States Code. I acknowledge that I caused to be made, and had filed on my behalf, a tax return for tax year 2013 that I knew contained false information.