A revenue agent with the Internal Revenue Service has been arrested in connection with a scheme to defraud the government by claiming that he suffered a loss when he sold his real estate, when in fact he realized a substantial profit.
Jim H. Liu, 42, of Diamond Bar, California, was arrested Sunday night at Los Angeles International Airport. Liu was indicted last week by a federal grand jury on three counts – one count of submitting a false tax return and two counts of obstructing the IRS investigation into his tax return. Liu is employed by the IRS as a revenue agent and conducts audits of taxpayers. Liu made his initial court appearance on Monday in United States District Court, and was released on a $30,000 bond. He is scheduled to be arraigned on November 24.
The indictment charges that Liu filed a false tax return that improperly claimed a loss on his sale of a property on Chanslor Street in Pomona. According to the indictment, Liu actually sold the Chanslor property for a substantial gain, and should have paid taxes on that substantial gain.
The indictment also alleges that during the IRS audit of Liu's tax return, he provided false documents and made false statements to the IRS in an attempt to obstruct the audit. Liu allegedly mailed and faxed documents to the IRS that falsely stated that he bought the Chanslor property for $231,250, when he knew that he had actually purchased it for $185,000.
Julie Parodi, Special Agent in Charge of the Treasury Inspector General for Tax Administration, which investigates corrupt IRS employees, stated: "The taxpaying public expects IRS employees to file and pay their taxes like everyone else. It is an embarrassment to the IRS when an IRS employee who is supposed to enforce the tax laws is charged with breaking those laws. Corrupt IRS employees undermine public confidence in the tax system and will be investigated and prosecuted to the full extent of the law.”
If he is convicted of the charges alleged in the indictment, Liu faces a maximum statutory penalty of 13 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The federal investigation of Liu was conducted by the Treasury Inspector General for Tax Administration.