DOJ Announces Sentencing of Iowa Tax Evader

Tax Evader Sentenced to 18 Months in Federal Prison

Made over a Million Dollars in Seven Years — Hid it From the IRS to Avoid Paying Over $300,000 in Back Taxes

Wednesday, November 27, 2019

A man who failed to pay income taxes for at least five years and then evaded paying back taxes for at least seven years was sentenced November 26, 2019, to a year-and-a-half in federal prison.

Scott Wallace, age 53, from Fort Dodge, Iowa, received the prison term after a July 11, 2019 guilty plea to one count of attempting to evade and defeat the payment of taxes.

At the guilty plea and in a plea agreement, Wallace admitted he ran a trucking business from 2000 to 2006, made income during those years, but failed to file income tax returns for 2002 through 2006. The Internal Revenue Service (IRS), however, calculated that he owed $130,903 in taxes for those years. After learning that he owed back taxes, Wallace willfully attempted to evade paying those taxes from 2008 through 2015. For example, in 2012 and 2013, Wallace was working in the trucking industry in North Dakota. Wallace had the income he was making deposited into bank accounts he had opened in his son's name, but that he controlled and used.

Wallace took other steps to avoid paying taxes, including hiding assets and income from the IRS, using his son's name and the name of a business to hide the fact that he made over $350,000 between 2012 and 2014, buying two trucks and a house in other names, and using a defunct business's bank account. In total, Wallace hid the fact that he made $1,205,433 from 2007 through 2014 from the IRS to avoid having to pay his back taxes. In May 2016, a civil judgment was entered against Wallace, ordering him to pay $313,853.88 in back taxes.

Wallace was sentenced in Cedar Rapids by United States District Court Chief Judge Leonard T. Strand. Wallace was sentenced to 18 months' imprisonment. He must also serve a two-year term of supervised release after the prison term. There is no parole in the federal system.

Wallace is being held in the United States Marshal's custody until he can be transported to a federal prison because he violated numerous conditions of his release while awaiting sentencing.

The case was prosecuted by Assistant United States Attorney Anthony Morfitt and investigated by the Internal Revenue Service — Criminal Investigations.