Released August 1, 2008
A Mission Viejo man and woman pleaded guilty to three felony counts of failing to file state income tax returns and one felony count of making false statements, the Franchise Tax Board (FTB) announced.
Anthony E. Brennan, 52, and Carla Ann Brennan, 60, operated Brennan & Sons Painting as an independent subcontractor to other general contractors. The couple, now divorced, received compensation of more than $1 million during the years 1999 – 2001 and failed to file state income tax returns for these same years.
The court ordered FTB full restitution of $187,071 representing the unpaid tax, penalties, interest, and the cost of the investigation. The Brennans previously paid $100,000 of the restitution amount and are being allowed time to pay the remainder. Additionally, Anthony and Carla were each given 40 hours of community service and placed on five years formal probation.
The failure to file tax returns is part of the annual $6.5 billion tax gap facing California. The tax gap is defined as the difference between the tax that is owed and the tax that is paid.
FTB discovered this case through its internal procedures. Each year FTB reviews income records from numerous sources, including the Internal Revenue Service, the California Employment Development Department, the Board of Equalization, employers, and banks. FTB compares this data with its database of tax returns filed to identify individuals who should have filed taxes but did not, or to find discrepancies between the income reported and income claimed. Annually, FTB contacts 800,000 individuals who have failed to file a California state income tax return.
Orange County Superior Court Judge Glenda Sanders presided over the case yesterday in Department H-1 of the Newport Harbor Justice Center. Orange County Deputy District Attorney Marc Labreche prosecuted the case.