Phoenix business owner pleads guilty to tax evasion


Date: January 4, 2022


Phoenix, AZ — On January 3, 2022, in Phoenix, Arizona, Kwan Sung Jin pleaded guilty to one count of tax evasion.

In his plea agreement, Jin stated that he purchased Cool Ace Air (ACE), an HVAC repair and replacement company operating in Phoenix, Arizona, in 2008. In 2013, he expanded his business to include plumbing services through a company called Ace Home Services (AHS). Jin implemented a scheme to evade taxes by willfully underreporting income from ACE and AHS. Specifically, he directed his employees to give him any cash received from customers and to make entries in their accounting software that would automatically back out cash sales by the amount of cash received, resulting in an apparent net sales amount of $0 in the company's general ledger. He also failed to report cash received by ACE for the sale of used HVAC units to metal recycling companies.

As a result of this scheme, cash receipts were not reflected in the Forms 1120-S, U.S. Income Tax Return for an S Corporation, for ACE and AHS. For tax years 2013 through 2016, he intentionally omitted cash receipts totaling $560,950 from ACE's and AHS's income. Because ACE's and AHS's income was passed through to his personal Forms 1040, U.S. Individual Income Tax Return, through a Schedule K-1, Shareholder's Share of Income, his own tax returns for 2013-2016 underreported his income by a total of $560,950. This underreporting resulted in additional total tax due and owing of $207,378 for 2013-2016.

Sentencing is currently set for March 28, 2022.