A former hotel manager from Clare, Michigan, was given a jail term of one year and one day today for submitting a false tax return. His father, the hotel’s owner, already pleaded guilty to hindering the grand jury’s probe against his son.
According to court records, Harold Walls, 58, oversaw the day-to-day operations of a Clare hotel owned by his father, Karl Walls, 86. From 2013 through 2017, Harold Walls did not record any of his earnings from working at the hotel to the IRS.
Instead of paying himself directly through the hotel’s payroll system, Harold Walls paid himself using alternative methods, such as sending checks to himself from the hotel operating account and using a hotel bank account to pay for personal expenditures.
Harold Walls allegedly gave inaccurate and incomplete information to the hotel’s tax preparer from 2012 to 2017, resulting in an understatement of the hotel’s commercial income. Harold Walls, in particular, failed to disclose to the tax preparer that the hotel had 11 “off-book” rooms that were not tracked in the hotel’s reservation system. Harold Walls also furnished the return preparer with documentation that exaggerated the amount of property taxes paid to the City of Clare by the hotel.
Harold Walls impeded the IRS investigation after it began by ordering a hotel employee to submit false statements to the IRS regarding the nature and scope of his job at the hotel. He also denied to IRS officers that he worked at the hotel.
Karl Walls hindered his son’s probe by instructing two witnesses to lie before the grand jury. Karl Walls urged a former hotel employee to testify that Harold Walls did not work at the hotel two days before the employee was supposed to give grand jury evidence in October 2018. Karl Walls also sought to get his tax preparer to make a similar false declaration regarding his son’s job status to the grand jury.
In addition to the prison term, U.S. District Judge Thomas L. Ludington ordered Harold Walls to serve one year of supervised release and pay the United States $254,562 in restitution.
The announcement was made by Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, who commended the U.S. Attorney’s Office for the Eastern District of Michigan for its help in this issue.
The IRS-Criminal Investigation is investigating the case.
The lawsuit is being prosecuted by Tax Division Trial Attorneys Melissa S. Siskind and Sam Bean.