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New Cumberland man will serve up to 3 years in prison for tax fraud

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HARRISBURG — The owner of an auto repair shop could face up to three years in prison and a $250,000 fine after pleading guilty to filing a false tax return in the year 2010, according to the U.S. Attorney’s Office for the Middle District of Pennsylvania.

Michael Powers, 53, of New Cumberland, pleaded guilty to understating his true income by $238,381 on his 2010 tax returns, according to U.S. Attorney Bruce D. Brandler. Powers, who owns and operates Powers Auto Repair in New Cumberland, owes $42,774 on that unreported income. Under the terms of his plea agreement, Powers will make restitution to the IRS in that amount, plus another $26,198 for unpaid taxes owed on the unreported income of $208,979 for tax year 2012.

The total amount to be repaid to the IRS is $68,972, Brander said.

The IRS investigation began after the IRS received a form 1099-K, indicating Powers Auto Repair had significantly more gross receipts than what Powers reported on his 2011 income tax return, Brandler said. A form 1099-K is a reporting document filed by entities that process credit card payments on behalf of businesses.

As a result, the IRS obtained Powers’ bank records, which showed he had established two accounts — a business account, and a personal account — at the same bank. Powers deposited all the cash and all of the checks he received from his customers into the business’ bank account, and all of his credit card income into his personal account. However, Powers did not report the income in his business account as income on his 2010 and 2012 tax returns.

Powers faces up to three years in prison, a $250,000 fine, and a term of supervised release following imprisonment, Brandler said.