Taxes in your practice: 10th Circuit upholds dentist’s prison term for tax scheme

Scott E. Vincent is the founding member of Vincent Law, LLC in Kansas City.

The U.S. Court of Appeals for the 10th Circuit recently affirmed a 41-month prison sentence imposed on a dentist convicted of tax evasion. In U.S. v. Ulibarri,¹ the court rejected the dentist’s arguments that the sentence was not reasonable due to his reliance on a tax scheme promoter’s alternative tax mitigation strategy and business trust structure to eliminate federal taxes.

Ulibarri serves as a reminder to lawyers that the IRS pursues clients of tax scheme promoters, particularly when they significantly and repeatedly utilize the scheme.

Background

Ryan Ulibarri, a dentist licensed in Colorado, owned and operated Ulibarri Family Dentistry starting in 2014. After establishing the dental practice, Ulibarri attended a seminar led by associates of Larry Conner purporting to teach business owners how to eliminate federal income taxes on business income using Conner’s alternative tax-mitigation strategy, which was determined to be an abusive trust tax scheme. Against the advice of his lawyers and accountants, Ulibarri used Conner’s unlawful tax shelter for over seven years.

Using Conner’s strategy, Ulibarri funneled his business earnings through a series of “sham trusts.” To effectuate the scheme, Ulibarri assigned ownership of Ulibarri Family Dentistry to a business trust, which distributed income to a family trust, which then distributed income to a charitable trust. Ulibarri’s family spending was covered by funds held in the trust accounts, and Ulibarri then improperly claimed these personal expenses as deductions.

The trust tax returns reported distributions and deductions matching or exceeding the reported income, with the net positive income ultimately “donated” to a tax-exempt private family foundation. The foundation also loaned funds back to the sham trusts, allowing Ulibarri full control and beneficial use of the dental practice income without any tax liability.

From 2016-2023, the scheme enabled Ulibarri to avoid more than $1.6 million in taxes on $5.3 million in earnings from the dental practice.² During this time, Ulibarri concealed the scheme from his banks and the IRS by using nominal grantors to sign documents and providing misleading and deceptive information about his income, assets, and trusts. He continued using the scheme even after repeated warnings from lawyers, bookkeepers, and lenders, and even after his initial indictment.

In 2024, Ulibarri was indicted by a grand jury on six counts of tax evasion for his 2017-2022 tax years. He ultimately pled guilty. The district court determined Ulibarri’s offense level, made adjustments, and then sentenced Ulibarri to 41 months of imprisonment, three months supervised release, over $1.6 million in restitution, and a fine of $150,000. This was the maximum imprisonment under the range for the applicable guidelines.

Ulibarri appealed to challenge his sentence as procedurally and substantively unreasonable.

10th Circuit analysis and decision

The 10th Circuit addressed both Ulibarri’s procedural and substantive unreasonableness claims but ultimately affirmed the district court’s ruling.

Procedural reasonableness

The 10th Circuit first reviewed Ulibarri’s procedural claim, noting that a sentence is procedurally unreasonable if the district court incorrectly calculates the guidelines sentence, treats the guidelines as mandatory, fails to consider statutory sentencing factors, relies on clearly erroneous facts, or does not adequately explain the sentence.

In this case, Ulibarri contended that the district court abused its discretion in misapplying the sentencing guidelines by improperly including, and miscalculating, a 2023 tax loss. He also contended that the district court improperly assessed a two-level “sophisticated means” enhancement.

Ulibarri was not indicted for the 2023 tax period, but the district court had included the 2023 loss in his sentencing. Ulibarri argued that his 2023 tax loss was not related to the tax scheme conduct. The 10th Circuit reviewed IRS testimony and district court findings to the contrary, which indicated the 2023 tax loss resulted from continuing to implement the tax scheme by using the sham trusts.

The 10th Circuit found that the district court did not err in finding that the sham trust usage in 2023 was part of the same course of conduct and aggregating it with the other loss amounts for the years in question.

In calculating the 2023 tax loss, the IRS agent used a guidelines method for unfiled returns treating the tax loss as 20% of gross income, less tax withheld or paid. Ulibarri made several arguments about the practice gross receipts and cost of goods deductions calculations done by the IRS agent under this method. However, the 10th Circuit noted that the guidelines contemplate a reasonable estimate based on available facts and found that the district court’s calculation of the 2023 tax loss was a reasonable estimate under that standard.

Finally, the guidelines provide a two-level sentence enhancement for an offense involving “sophisticated means,” which is especially complex or intricate conduct in execution or concealment of an offense. Ulibarri argued the tax scheme was not “sophisticated” and did not involve elaborate planning or concealment on his part; he had merely purchased Conner’s tax shelter services and relied on financial advice as a client.

The 10th Circuit had no trouble finding that Ulibarri’s offenses involved sophisticated means, noting he misused multiple financial accounts, sham trusts, and grantors, and went to elaborate lengths to hide more than $5 million in business income from the IRS.

The 10th Circuit also rejected Ulibarri’s effort to shift blame to the tax shelter promoter, noting that he continued using the tax shelter scheme despite clear and repeated warnings from his lawyers and accountants that the conduct was unlawful.

Based on these findings, the 10th Circuit concluded that the district did not err in applying a sophisticated means sentencing enhancement.

Substantive reasonableness

The 10th Circuit next addressed whether the district court abused its discretion in applying the following U.S. Code § 3553(a) factors to impose an unduly long sentence:

• The nature and circumstances of the offense and the history and characteristics of the defendant
• The need for a sentence to reflect the seriousness of the crime, deter future criminal conduct, prevent the defendant from committing more crimes, and provide rehabilitation
• The sentences that are legally available
• The sentencing guidelines
• The Sentencing Commission’s policy statements
• The need to avoid unwarranted sentence disparities
• The need for restitution

Ulibarri argued that the district court did not give adequate weight to certain factors, including the compromise to his personal and professional reputation, the conviction itself as general deterrence without a custodial sentence, unfair sentencing disparity relative to similarly situated defendants, and his inability to work while incarcerated which delayed restitution payment.

The 10th Circuit found that all of Ulibarri's factors were argued at length during the sentencing hearing and further found that “re-weighing” the § 3553(a) factors would be "beyond the ambit of our review."

The 10th Circuit concluded that the sentence imposed was within the guidelines range and presumptively reasonable, and the sentence, therefore, was not substantively unreasonable.

Conclusion

The 10th Circuit decision in Ulibarri shows the difficulty in challenging district court discretion in applying sentencing guidelines. The decision also rejects the idea that a taxpayer can simply rely on a tax shelter promoter or professional advisor in structuring and implementing a tax shelter scheme.

Endnotes
1 2026 PTC 130; 10th Cir. 2026.
2 Id.