Meriden-based SRC Construction, Inc. was ordered ordered on Monday, November 14, 2016, to pay a $250,000 fine for filing a false tax return.
According to court documents and statements made in court, SRC Construction, a real estate development and construction management firm, employed an internal accounting department. They handled the general ledger, journal entries and bank accounts for the business, including the receipt and payment of invoices. At least one individual employed by the company was responsible for overseeing and coordinating the business and financial matters for the company’s owner. The individuals and others under the individual’s control reviewed payments made by the company to employees, vendors and others, and directed how the items should be charged to the expense account. The individual instructed others that most, if not all, invoices be paid out of company funds, including a series of expenses that the individual knew were not deductible business expenses. The individual, who also was responsible for providing to the company’s outside accounts all information to prepare audited financial statements and tax returns, knowingly provided to the accountants a substantial number of non-deductible expenses knowing that they were non-business expenses.
In February 2016, SRC Construction willfully made and subscribed a false corporate tax return, a 2004 Form 1120 for the Fiscal year ending April 30, 2005. that overstates expenses. As a result, for the 2004 tax year, the company failed to report corporate income totaling $296,642, resulting in tax loss of $112,609.
On July 15, 2016, SRC Construction pleaded guilty to one count of filing a false tax return.
SRC Construction has paid the $250,000 fine, as well as the identified back taxes due of $112,609. The company also itemized for the court the various accounting and other internal changes made as a result of the investigation that are intended to ensure future tax and accounting compliance.