California Tax Law Blog

Coast Magazine Lists the Top Orange County Tax Attorneys

Coast Magazine Lists the Top Orange County Tax Attorneys

| Oct 03 | Tax Law Blog | No Comments

The top attorneys were named by AVVO in Coast Magazine by their practice areas. We are proud to have been named one of the top Orange County tax attorneys by the publication. This is not the first time we have been recognized, and definitely will not the last. Our tax law team continues to expand with convenient offices not only in Los Angeles, but Irvine, Orange County and San Diego as well. We continue to resolve and help our clients prepare for both domestic IRS and international tax law challenges they may be facing. We offer many helpful tax tips and informational guides on our website and can help you answer your questions directly. If you decide to engage our law firm, you will also notice that our rates are much lower than most Orange County tax firms while our service, reputation and industry knowledge is hard to beat.

Give the Law Offices of David W. Klasing a call today.


2015 top los angeles tax attorney

*With it’s main offices in Irvine California, The Tax Law Offices of David W. Klasing were nominated as one of the top Orange County tax attorneys , not Los Angeles tax attorneys as may have been erroneously mentioned. We apologize for the error!

Australia Exposes 30,000 Accounts to IRS

Australia Exposes 30,000 Accounts to IRS

| Oct 02 | Tax Law Blog | No Comments

Australia Makes The First FATCA Transmission Exposes 30,000 Accounts to IRS

Over the past decade, the United States has made significant strides in its attempt to curb the creation and maintenance of secret overseas bank accounts. Although the law that requires taxpayers to disclose an interest in a foreign account has been around for decades, President Obama’s administration is the first to encourage Congress to draft legislation that takes a hard line on bank secrecy. Since 2010, the State Department and the Treasury have been working together to plan and implement a process by which foreign nations are able to transmit information about American’s bank accounts to the IRS, and last week, the first electronic transmission of information on 30,000 foreign accounts in Australia held by U.S. citizens or entities was received by the United States from the Australian government.

A Brief Review of FBAR and FATCA Legislation

The Foreign Bank Reporting Act (FBAR) creates a legal responsibility for taxpayers to either declare that they do not have any ownership interest (or signature authority) in a foreign bank account that has had a balance of $10,000 or more, or provide information about any such account that does exist. It is not illegal to have a foreign bank account. But because the United States taxes its residents on their worldwide income, the IRS has an interest in keeping track of where their subjects are keeping their money. Although the keeping of a foreign bank, brokerage or miscellaneous financial account is not illegal, lying to the United States about its existence in order to facilitate offshore tax evasion is and the Department of Justice is having no problem throwing U.S. residents and those that facilitate offshore tax evasion in prison over this issue.

In the past, it was hard for the government to check the validity of declarations made by  U.S. residents with regard to foreign accounts due to bank secrecy laws in Switzerland and other popular offshore tax havens. But in 2010, Congress passed the Foreign Account Tax Compliance Act (FATCA), a game changer in the fight against undeclared foreign accounts. FATCA requires that foreign banks provide the IRS with extensive information about accounts determined to be owned by U.S. tax residents or entities. If a foreign bank fails to comply with law, they are subject to a 30% withholding on any of their funds transferred to the non FACTA compliant bank. These harsh penalties have forced many foreign governments, including Australia, to comply with FATCA and its provisions.

Australia’s FATCA Compliance Efforts

In April of 2014, Australia signed an Intergovernmental Agreement (IGA) with the United States that brought Australian financial institutions into compliance with FATCA. Under the agreement, Australian banks will transmit information about bank accounts that are believed to be owned by Americans to the Australian Taxation Office (ATO) and the ATO will then send that information to the IRS. According to Australian news sources, the ATO was interposed in the process in order to significantly reduce compliance costs of the foreign banks.

Last week, the first electronic transmission of Australian account information reached the United States. Information on over 30,000 accounts with U.S. depositors from financial institutions in Australia is now at the fingertips of the IRS and the Department of Justice. The details of the accounts will be analyzed and taxpayers will be criminally investigated and prosecuted if it is determined that they willfully failed to disclose a foreign account’s existence to the IRS.

The OVDP May Be An Option For U.S. Residents With Foreign Accounts

If you have a foreign bank account that has not yet been declared to the government, it is not too late to get help. The IRS has established a program that can help a taxpayer with a foreign account stay out of federal prison. The Offshore Voluntary Disclosure Program (OVDP) allows taxpayers to disclose their foreign account, pay any back-taxes, interest, and a reduced penalty in exchange for the government’s word that criminal prosecution will not be a repercussion of the taxpayer’s illegal activity. Although the OVDP is not right for everyone, it provides many taxpayers with a way out without the fear of spending a large part of their lives in a federal prison. But there is a catch: the OVDP is not available to those taxpayers who are already being investigated by the IRS or the Department of Justice for any tax reason. Thus, seeking the counsel of an experienced tax attorney should be your first priority if you have an undeclared foreign bank account.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have many years of experience assisting taxpayers in a variety of tax matters, including extensive experience in the OVDP process. In many situations, the IRS and Department of Justice will send their very best to prosecute cases that involve bank secrecy. Ensure that you are represented by a group of zealous tax professionals who are ready to advocate for your physical and financial freedom. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

Canadian Ringleader in Tax Refund Scheme Convicted by U.S. Court

Canadian Ringleader in Tax Refund Scheme Convicted by U.S. Court

| Sep 29 | Criminal Tax Representation | No Comments

Those that have been following news updates focused on U.S. taxation are fully aware that the Department of Justice and the Internal Revenue Service are waging a war on Americans with secret bank accounts overseas. Foreign Bank Account Reporting and Foreign Account Tax Compliance Act legislation have made disclosure a requirement and willful noncompliance a felony. But while the U.S. was busy squaring-off against Switzerland, a group of Canadian citizens was able to steal over $3.5 million from the IRS. But per usual, the criminals’ bad deeds came back to haunt them as the ringleader was convicted by a federal jury last week and will soon be sentenced to serve a portion of his life in a federal prison.

According to a Department of Justice press release, Kevin Cyster, 52, of Burlington, Ontario was found guilty by a jury in the U.S. District Court for the Western District of New York on charges of making a false claim against the United States, conspiracy, and illegally transferring stolen money in foreign commerce. Per court documents, the U.S. alleged that Cyster was the ringleader of a group of Canadians who attempted to steal nearly millions from the IRS by filing falsified forms claiming a refund. The group used a tax preparer to electronically file the fraudulent documentation.

According to the Department of Justice, the group filed forms with the IRS that falsely claimed that they had more than almost $10 million withheld (for the purposes of paying U.S. taxes) from payments that were made to them by various Canadian financial institutions. Once that information was filed, the group filed tax returns that then sought the refund of a portion of the withholdings. Although the IRS Criminal Investigation Division caught on to the fraudulent activity, by that time, over $3.5 million had already been refunded.

Cyster is scheduled to be sentenced on January 4th of next year and is facing a statutory maximum of 30 years in a federal prison and a fine of up to $7 million. The other members of the conspiracy have either been convicted, are currently being prosecuted, or are deceased.

This story is a prime example of the Department of Justice’s unrelenting defense of U.S. coffers. The vast majority of those who attempt to seriously defraud the government are caught and those that do not have experienced and effective representation are often sentenced to years in a federal prison and face fines in the millions. Although taxpayers should never behave in a way that violates federal or state tax laws, taxpayers have options if they face an investigation or prosecution. Determining whether to make certain statements during an interview could be the difference between walking free and being incarcerated. And although many taxpayers feel as if they are able to “wing it” or talk their way out of an accusation of tax fraud or evasion, only an experienced tax attorney is able to give unbiased and tailored advice for any particular situation

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have a plethora of experience in assisting taxpayers in a variety of different situations. Whether you are facing an examination, an investigation, or full-blown criminal or civil litigation, our tax professionals are here to zealously advocate for your best interests. When the IRS and Department of Justice knock on your door to inform you that you are the subject of an investigation, they will send skilled professionals. Make sure that you don’t answer alone. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.


North Carolina Man Faces Nearly Three Years in Federal Prison For Obstructing the IRS

North Carolina Man Faces Nearly Three Years in Federal Prison For Obstructing the IRS

| Sep 25 | Criminal Tax Representation, IRS | No Comments

Federal Prison For Obstructing the IRS

Most everyone that grew up in the past century has been caught with his or her hand in the cookie jar. That is to say, all of us have been caught doing something wrong. The majority of the time, we fess up to the blatant bad behavior and accept whatever type of punishment comes our way. Deep down inside, we hope that our cooperation after being caught red-handed will yield a less drastic punishment than we would have received if we had maintained our innocence to the bitter end. Surprisingly, the U.S. criminal justice system works similar to our child-like instincts and sometimes rewards those who cooperate. But much like a parent, if you double cross the Department of Justice or Internal Revenue Service, your punishment will be very severe.

According to a Department of Justice press release, Thomas Tilley, 80, of Durham, North Carolina, was sentenced to serve a 32-month prison term for his role in a scheme that corruptly impeded and obstructed the administration of the Internal Revenue Code. The statutory maximum sentence for Tilley’s crime was 36 months, and although it appears as if he was given a break when it came to sentencing, the sentence was much worse than it needed to be. In November of 2014, Tilley pleaded guilty to the single charge referenced above and agreed to provide probation and court officials with information pertaining to his current and former conduct. In exchange, the Department of Justice and the court agreed to recognize an “acceptance of responsibility credit”. The credit would effectively reduce the amount of time that Tilley would be required to serve in connection with the guilty plea. But after his plea was entered but before sentencing, probation and court officials found out that Tilley had continued to provide false information regarding his current and past activities. At his sentencing hearing, Chief U.S. District Judge William L. Osteen Jr. of the Middle District of North Carolina showed little deference for the age of the defendant when he sentenced Tilley to nearly three years in a federal prison.

Tilley’s original illegal activity that gave rise to the investigation and his prosecution spanned from 1993 to 2010, according to DOJ officials. Court documents state that Tilley sent fraudulent documentation to the IRS in an attempt to eliminate his tax debt. Further, he was alleged to have used sham entities to buy and sell his property and placed false liens on other pieces of real property in order to deceive the IRS about the value and availability of his assets. Finally, for tax years 1994 through 2013, Tilley failed to file state or federal income tax returns despite claiming that his net worth was as high as $30 million during those times.

Going Toe-to-Toe with the Government is Serious Business

This story goes to show anyone who has or is currently engaging in fraudulent tax activity the seriousness of the potential consequences. Mr. Tilley original deal was likely procured with the help of an experienced tax attorney, but the hard work of his legal representation was thrown away when he decided to take matters into his own hands and continued lying to authorities. An effective tax attorney’s job is to counsel a client and put them into the best position possible with regard to their particular case.

Experienced Tax Attorney Support is Available

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience assisting taxpayers with state and federal tax matters. Whether you are facing an examination, criminal tax investigation, or a full blown civil or criminal trial, our tax attorneys, CPA’s and support staff are here to zealously advocate for your physical and financial freedom. As Mr. Tilley learned the hard way, the IRS and Department of Justice are out to ensure that convictions are secured against those who break federal tax laws. When the government drags you into the ring, make sure that you have a team of experienced and effective tax professionals in your corner. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation today.


Federal Court Grants John Doe Summons Targeting Belize Banks, Aids DOJ in Fight Against Bank Secrecy

Federal Court Grants John Doe Summons Targeting Belize Banks, Aids DOJ in Fight Against Bank Secrecy

| Sep 23 | FBAR Compliance and Disclosure, OVDI Program | No Comments
John Doe Summons

For our readers that have been following the recent developments with regard to the government’s war against offshore tax evasion, it is plainly apparent that individuals with accounts in Swiss banks are not safe. Whether it is the threat of prosecution by the U.S. or pressure by their own government, banks in Switzerland are handing over loads of information to the Department of Justice and the Internal Revenue Service regarding U.S. Taxpayers that have accounts with them. The apparent Swiss-centric approach to curbing secret foreign accounts may bring some comfort to those with accounts in other countries, but any perceived solace is surely misguided. Last week, a federal court granted “John Doe” summons affecting accounts in Belize, a move that signaled the global reach of the United States taxing authorities.

According to an announcement made by the Department of Justice, a U.S. District Court Judge Ursula Ungaro granted “John Doe” summons that target overseas bank accounts at Belize Bank International Limited (BBIL) and Belize Bank Limited (BBL). The Justice department believes that some banks in Belize have offered services to Americans that have assisted U.S. Taxpayers in the hiding of assets (and investment income) offshore.

A John Doe summons is a legal demand to produce documents with regard to individuals whose identities are unknown.  Thus in this situation, the United States doesn’t know who they are looking for when they request the information. Any evidence that is recovered while reviewing what is provided in accordance with the summons will be used to identify U.S. tax residents that may have undeclared foreign bank accounts.

In addition to the summons pertaining to the accounts that belong to the Belize banks, the Justice Department was also granted summonses with regard to correspondent accounts maintained by Citibank. When a foreign bank is not able to maintain accounts in a particular country, they find a bank that is willing to open “correspondence accounts” for their customers. Thus, the Belize banks were able to establish correspondence accounts for their customers using Citibank accounts. The documentation that is produced through the summons process could provide the Justice Department and the IRS with a massive amount of ammunition in their war against tax evasion and reporting violators.

The news of this round of John Doe summons is indicative of the U.S. government’s relentless effort to identify and prosecute any U.S. tax resident that fails to disclose the existence of a foreign financial account and report for U.S. tax purposes offshore income. According to federal domestic law, an individual must report any ownership interest or signature authority in a foreign bank account with a balance of $10,000 or higher. A taxpayer who is found to have willfully failed to follow Foreign Bank Account Reporting (FBAR) laws will face penalties that equal 50% of the high-balance in the foreign bank account (for up to a five year statute of limitations leading to a potential 250% offshore penalty on the undeclared foreign assets or accounts) and may face several years in a federal prison.

The government has established one way for taxpayers to come forward and avoid the possibility of jail time. The Offshore Voluntary Disclosure Program (OVDP) offers taxpayers a deferred prosecution agreement if they agree to disclose their foreign bank account and pay back-taxes, interest, and penalties associated with the secret account. But the OVDP is time sensitive as taxpayers are typically disqualified if the IRS for any reason is already investigating an applicant. Thus, if a John Doe summons uncovered information about a hidden foreign account about a taxpayer and the IRS moved on the information, they would likely be disqualified from participating in the program.

The tax law and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience assisting taxpayers with a variety of tax-related issues. Taxpayers with an undeclared foreign bank account are essentially sitting ducks and will eventually be targeted by the IRS and the Department of Justice. Our knowledgeable and effective team will zealously advocate for your physical and financial freedom. Ensure that you aren’t alone when the government comes knocking. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

Income Tax Attorney

Income Tax Attorney

| Sep 22 | Audit Representation, IRS | No Comments
Income Tax

Paying income taxes on the success you or your business have experienced is an individual’s contribution back to the United States and part of what makes this country great. From the tax revenues provided by successful businesses, hard-working individuals, and other commercial ventures the local, state, and federal governments obtain funds to maintain the transportation and communications infrastructure, provide for education and training, and provide important social services.

However in recent years many hard-working individuals have noticed the distinctly anti-tax rhetoric that has come through Washington D.C. To many taxpayers, it seems as if our elected officials have nothing positive to say about the IRS and the way it conducts its operations. Some taxpayers may even decide or believe that the IRS’ actions are improper. However, taxpayers are still required to file, pay, and satisfy all other applicable tax obligations regardless of their own personal beliefs or the beliefs of elected representatives. Taxpayers who fail to file taxes, pay taxes, or satisfy other tax obligations in a timely manner can face significant fines, penalties, and other tax consequences including potentially exposure for tax crimes.

Most Individuals Must File & Pay Tax Every Year

While some individuals can avoid the filing of income tax, the truth is that most individuals living and working in the United States will be required to file by the April 15 filing deadline. This is due to the fact that the gross income a taxpayer may have before filing is relatively slight. Furthermore, even people without a strict filing obligation often file taxes because the only way to receive a tax refund is to file.

The amount of gross income an individual can have before an obligation to file income taxes is based on one’s age and filing status. For instance, for the 2014 tax year a single filer under age 65 was obligated to file income taxes after he or she earned $10,150 in gross income. In contrast a single filer age 65 or older is not required to file until he or she has $11,700 in income. Married taxpayers filing jointly, head of household, and qualifying widowers with one or more dependent children also can earn more gross income before they are required to file taxes.

The IRS Pursues Taxpayers Who Fail to File or Pay Taxes

Taxpayers who fail to file or pay taxes can face serious penalties for their noncompliance with the U.S. Tax Code. While the reasons behind failure to file or pay taxes can vary, the key in determining the level of liability you face is whether the actions or inaction was willful. Willful acts are those acts or failures to act that involve a voluntary or intentional disregard of a known legal duty. For instance, a taxpayer who intentionally works to cover-up and conceal past filing errors is considered to act willfully. Likewise, a taxpayer who intentionally endeavors to avoid learning about this year’s tax filing deadline has engaged in willful blindness (which can constitute willful behavior in certain circumstances especially were foreign accounts and unreported income are at issue).

A taxpayer’s willful failure to file his or her annual income tax report can be punished under 26 USC 7203. Willful failure to file taxes can be punished by up to a one year federal prison sentence and significant fines and penalties. The taxpayer must also be required to pay back the amounts he or she gained through a tax fraud or tax evasion scheme as restitution. If the taxpayer attempts to hide or otherwise conceal his or her failure to file, he or she may be charged with the obstruction of the administration of the tax code or face felony (rather than misdemeanor) Spies Evasion charges. Taxpayers who allegedly commit such acts can, upon conviction, can be punished by a federal prison sentence of up to three years.

Rely on Our Income Tax Experience in Los Angeles

If you suspect a past filing mistake may cause big problems down the road or if you have already received a letter or other communication for the IRS, the experienced tax lawyers and CPAs of the Tax Law Offices of David W. Klasing can fight for you. We are experienced in dealing with the IRS and work to devise a strategy that is likely to mitigate the tax situation faced by the taxpayer by reducing penalties while permitting the taxpayer to come back into compliance with the tax code while simultaneously minimizing exposure to potential tax crimes. To schedule a reduced-rate tax consultation with one of our experienced and dedicated tax professionals, call us at 800-681-1295 or contact us online today.

IRS 50 Percent Offshore Penalty List Continues to Expand; Fix Your Offshore Tax Disclosure Problems Before it Is Too Late

IRS 50 Percent Offshore Penalty List Continues to Expand; Fix Your Offshore Tax Disclosure Problems Before it Is Too Late

| Sep 21 | FBAR Compliance and Disclosure, IRS, OVDI Program, Tax Law Blog | No Comments
Avoid the 50% penalty

If you have spent any time on this blog or reading about tax and international tax issues, you probably already understand that it is not an accepted or acceptable practice to keep secret offshore accounts. For a number of years many taxpayers may have gotten away with it, however one’s continued luck can no longer be counted on due to the significant efforts undertaken and resources committed by the United States government in seeking and stamping out offshore tax evasion.

The U.S. government has, essentially, constructed a global banking and tax information clearinghouse from which the IRS and Department of Justice are privy to an array of foreign financial data. First, amendments to the Bank Secrecy Act created new penalty for even inadvertent Report of Foreign Bank Account (FBAR) reporting errors while strengthening the penalty for willful violations. This new penalty placed a new emphasis on reporting foreign accounts and providing offshore account information to the government. The passage of FATCA further increased the importance of making disclosures of foreign accounts due to its corresponding tax information sharing agreements. Through these agreements the U.S. government can review a vast amount of tax and financial data from more than 100 nations to identify noncompliant U.S. taxpayers.

Banks Continue to Agree to IRS’ Swiss bank Program Placing Previous Confidential Account Data in Jeopardy

This week, the IRS announced that two additional banks had come to terms with the United States government through its Swiss Bank program. The banks that agreed to the terms of the program are required to meet certain standards and agree to provide the U.S. government with certain account information and take other actions to achieve and safeguard compliance. These acts include:

  • A comprehensive disclosure of all cross-border banking and investment activities.
  • Provide specific information on an account-by-account basis.
  • Participate in all information requests under an operative information sharing agreement tax treaty.
  • Payment of applicable penalties.
  • Close accounts of individuals that refuse to come into compliance.

Swiss bank Bank La Roche & Co AG agreed to these terms and others. Taxpayers who have had offshore dealing with the company or who have transferred funds out of the bank without making an offshore disclosure can face serious penalties and are now significantly more likely to be identified and prosecuted.

What is the Standard Penalty Under FBAR and FATCA?

Penalties under FBAR and FATCA are harsh. Even an inadvertent filing mistake can cost a taxpayer a $10,000 penalty under FBAR for each year where the account went undisclosed. If a taxpayer’s failure to file FBAR is believed to have been because of an intentional or voluntary act or omission, the penalties for a willful failure to file FBAR are even harsher. Willful failure to file FBAR can result in a penalty that is the greater of $100,000 or 50 percent of the account’s balance. Since penalties can be applied for multiple tax years, it is not uncommon for a willful tax violation to exceed the account’s original balance.

Penalties under FATCA can also be harsh. Failure to file under FATCA can result in a penalty of $10,000. A taxpayer that continues to fail to comply with FATCA disclosure requirements can be assessed an additional $50,000 fine. Furthermore, if the taxpayer has underpaid tax due to non-disclosure of offshore assets, a substantial understatement penalty of 40 percent applies.

How Can OVDP or Streamlined Disclosure Mitigate the Tax Consequences I Face?

Participating in the OVDP or Streamlined Disclosure programs offered by the IRS can permit a taxpayer to come back into compliance while facing significantly reduced fines and penalties. Individuals who represent a low compliance risk may be able to use the Streamlined disclosure program and certify their non-willfulness to have many of the fines and penalties they would otherwise face waived. For people who cannot qualify for Streamlined disclosure, Offshore Voluntary Disclosure Program (OVDP) can provide a pathway to compliance with reduced penalties. Typically individuals must pay a 27.5 percent penalty to participate in OVDP. However, if your bank is added to the IRS’ list of Foreign Financial Institutions or Facilitators, you will face a 50 percent offshore penalty.

In short, there is still a window for non-complaint taxpayers to come back into compliance while paying mitigated fines and penalties. However, that window is quickly closing. In light of FATCA and FBAR disclosure and an increasing number of foreign banks taking the DOJ’s Swiss bank deal, the odds of detection and identification have never been greater. If you suspect or fear potential offshore account disclosure issues, the time to act is today.

To schedule a reduced-rate offshore tax consultation, contact the experienced and dedicated tax lawyers and CPAs of the Tax Law Offices of David W. Klasing by calling 800-681-1295 or contact us online today.

Restaurant Owner, Tax Preparer Face Criminal Tax Charges for Fraud in two Separate Matters

Restaurant Owner, Tax Preparer Face Criminal Tax Charges for Fraud in two Separate Matters

| Sep 18 | Criminal Tax Representation, IRS, Payroll Tax Fraud, Tax Preparer Fraud | No Comments
Tax Preparer face criminal tax charges

Running a business is a difficult endeavor. Costs change and frequently seem to overrun even your most exacting estimates. In other cases a sudden or seasonal downturn in business can hit at exactly the wrong moment throwing the chances of your company’s continued viability into disarray. For many business owners it seems that setbacks and problems appear at the worst possible moment. Thus, many business owners come to believe that they have a simple choice: cut cost or lose the company.

Unfortunately, many business owners decide to make-up for unexpected expenses, lower than projected revenues, and other problems by cheating on their personal taxes, business taxes, or both. Business owners that cheat on payroll taxes can face personal liability for their failures.

Former Restaurant Owner Pleads Guilty to Tax Evasion

From 2006 through 2009, Jon DiBernardo was the owner of Water Street Landing. Water Street Landing is a high-end restaurant located not far from Niagara Falls in New York. According to charges filed by prosecutors, DiBernardo submitted inaccurate income tax returns to the IRS. The inaccurate forms understated the revenue of the business in order to evade tax legally due and owing. Additionally DiBernardo was also charged with evading paying payroll tax by keeping employees off of them books and paying them under the table. In all, the IRS claimed DiBernardo’s fraudulent filing activities resulted in more than $400,000 in income being concealed from the IRS. DiBernardo’s activities regarding off the books employees resulted in a failure to report $285,705 in employee wages. DiBernardo’s fraudulent filing actions cost the government $111,377 in revenue while the failure to pay employment taxes resulted in a government loss of about $43,000.

DiBernardo has plead guilty to one count of tax evasion. If he faces the maximum penalty he could be subject to a five year prison sentence, a fine of $100,000, or both.

Tax Preparer Faces Two Year Prison Sentence for Tax ID Theft Scheme

Tax preparers can also face serious penalties due to fraudulent actions taken for their own gain or for the gain of their clients. For this tax preparer, the motive was greed and personal enrichment. Tax preparer Lasondra Miles Davis and her mother Teresa Floyd ran a number of tax preparation businesses like T&L Tax Service. Through her tax preparation companies Davis and Floyd obtained personally identifying information from her clients. Davis and Floyd committed identity theft and used this information to file more than 900 fraudulent income tax returns. The 900 fraudulent returns requested more than $2.5 million in fraudulent refunds.

Davis pleaded guilty to a single count of aggravated ID theft earlier in 2015. This past week she appeared in court for sentencing. Davis was sentenced to serve a two year federal prison sentence. After release she will continue to serve one year of supervised release.  Davis must also make restitution to the IRS for her involvement in the stolen ID scheme. Floyd also pleaded guilty earlier this year entering her plea for one count of conspiracy to defraud the U.S. and a single count of aggravated ID theft. Floyd is still awaiting sentencing.

Rely on Our Tax Controversy Experience

If you have been charged with serious tax crimes, the stakes are simply too high to face the experienced IRS agents and prosecutors from the Department of Justice alone. The agents and prosecutors are experienced and strategic in their actions and requests because they pursue taxpayers for tax crimes and violations every day.

As a taxpayer and U.S. citizen you deserve to be able to present your side of the story and any mitigating or explaining factors. However, taxpayers who are unfamiliar with the system, its requirements, and deadlines can easily make an inadvertent and inaccurate admissions, exacerbate problems with their position through a key omission, or miss an essential filing deadline. Working with an experienced and dedicated tax fraud defense lawyer can increase the chances that you will be able to mitigate the consequences you face. To schedule a reduced-rate, private consultation with an experienced and dedicated tax attorney call the Tax Law Offices of David W. Klasing today by calling 800-681-1295 or contact us online.

Update: Minnesota Real Estate Professional Sentenced in Tax Evasion Case

Update: Minnesota Real Estate Professional Sentenced in Tax Evasion Case

| Sep 17 | Audit Representation, IRS, IRS Audits | No Comments
Criminal Investigations

Taxpayers who keep up with news of prosecutions and convictions of tax evaders often read the stories that we or other tax professionals post and think to themselves “that could never happen to me” or “the sentences can’t be that harsh”. But the reality is that a criminal tax investigation leading to time in a federal prison can happen to anyone and the punishments can be just as bad or more severe than has been reported. To drive home that point, we have a sentencing update to report with regard to a Minnesota real estate executive that was charged with a slue of tax and other federal crimes last year. You can read our original story detailing the charges here.

According to reports by various news agencies, Bartolomea Montanari was sentenced to spend six and a half years in a federal prison. Furthermore, he was ordered to pay a fine of $1.5 million and restitution of $100,000. The sentence and financial sanctions came as a result of a guilty jury verdict last November. Charges against Montanari included tax evasion and both mail and wire fraud. The federal judge that handed down the sentence blasted the ex-real estate professional by saying that his criminal acts were perpetrated in order to keep up an “incredibly flamboyant lifestyle”.

Court documents reveal that Montanari had failed to pay employment and other excise taxes for the businesses that he owned (St. Croix Development, Emlyn Coal Processing and Montie’s Resources) between 2009 and 2012. The amount of tax evasion was allegedly in excess of $700,000 before any interest or penalties associated with the illegal behavior.

In addition Montanari’s tax evasion activities, he was also found to have committed mail and wire fraud when he stole money from both his business partner and a financing company that extended credit to Montanari for the purchase of a bulldozer. Prosecutors proffered at trial that the defendant produced the financing company with a fake invoice for a piece of Caterpillar construction equipment that listed the price of the unit $100,000 higher than its value. When the seller received a check from the financing company for the fraudulent amount, he notified Montanari of the discrepancy. The defendant requested that the seller write him a check for the difference, which Montanari then used as a down payment for his personal residence.

The IRS Criminal Investigations Division and the U.S. Postal Inspection Service conducted the investigation into Montanari’s criminal activities. When IRS agents questioned him with regard to his failure to pay employment and excise taxes, he made the assertion that he was impoverished and unable to pay any taxes, hiding his extravagant lifestyle all the while.

IRS Criminal Investigations Can Happen To Anyone

This story goes to show readers that investigations and prosecutions for tax evasions can happen to anyone. And although it is true that a very small group of taxpayers may be able to escape a serious prosecution after an investigation has been opened, most cannot. Furthermore, taxpayers who attempt to talk their way out of an examination, investigation, or prosecution wind up making incriminating statements to investigators and end up behind bars and financially ruined. The IRS and Department of Justice agents know exactly what questions to ask and how to ask them in order to elicit an incriminating response. An experienced tax attorney can make sure that you say what is necessary to keeping you out of prison and nothing more.

Contact An Experienced Tax Attorney Today

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have a plethora of experience in representing taxpayers in all phases of an examination, investigation that occur pre-indictment and will associate in appropriate counsel where a case goes post – indictment.  Trying to build a defense of your own when faced with an allegation by the IRS or DOJ is a bad idea and could wind up with you in prison and your family suffering financially. Retaining an experienced tax attorney is the best possible investment that you can make in your future physical and financial freedom. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

Pennsylvania Attorney Sentenced In Tax Evasion, Mail Fraud Case

Pennsylvania Attorney Sentenced In Tax Evasion, Mail Fraud Case

| Sep 16 | IRS, Tax Law Blog | No Comments
Tax Evasion and Mail Fraud

While some of the general population takes pleasure in poking fun at the legal profession with lawyer jokes, when professional legal services are needed, they trust lawyers and their staff to efficiently advocate and plan for their well being, whether it be financial or physical. When an attorney does an inadequate job, there are several consequences such as discipline by their law licensing body or a civil lawsuit brought by the client or their descendants. But when an attorney breaks the law in the performance of their services, they aren’t immune from criminal prosecution and can end up in federal prison. A Pennsylvania attorney found this out first hand when he was sentenced this week for a number of crimes relating to his representation of a client.

Doylestown, Pennsylvania lawyer, Ralph Scott, 72, was sentenced to four years in a federal prison on September 10th for stealing over $10 million from a client’s estate. The sentencing stemmed from a guilty plea back in March of a single count each of tax evasion, mail fraud, and attempting to interfere with the administration of internal revenue laws. He also pled guilty to three counts of failing to file his own tax returns.

John C. Bready was a client that enlisted Scott’s services with regard to administering his estate. At the time of Bready’s death, the value of the estate exceeded $6 million, which triggered a federal law that required that a tax return be filed on behalf of the estate and also mandated that approximately $520,000 of the estate funds be paid to the Internal Revenue Service. Instead of filing the required return, Scott diverted over $2 million of the money from the Bready estate to infuse money into his own law practice accounts.

According to authorities, Scott wanted to avoid paying the federal tax in order to keep enough money on hand to pay the estate’s beneficiaries. Even after the client’s death, he forged the decedent’s signature in order to deposit fraudulent checks into the law firm’s account. Finally, Scott allegedly coerced Bready’s successor executor into renouncing his duties in an attempt to continue his money siphoning activities.

In addition to the four years that Scott will serve in a federal prison, he was ordered to spend three years in a supervised release program. Further, Scott was ordered to pay restitution in the amount of $2.3 million, forfeit $1.7 million, and pay a $375 special assessment.

This story provides two very important lessons. First, if you a legal or tax professional, it is important to ensure that you are following the law to the letter. Mr. Scott discovered that breaking the law while providing legal services to his clients was a big mistake. His transgressions will likely result with him spending most of the rest of his life behind bars. Second and most importantly, this story should provide an individual or family the necessary level of awareness when choosing an attorney for your tax or estate planning needs. There are thousands of attorneys out there that purport to provide excellent services. But as was demonstrated in the above story, the proper due diligence into an attorney can result in you being taken for a ride.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have a plethora of experience in representing individuals in a myriad of tax and estate planning situations. From tax preparation and tax disputes to estate, wealth, and successor planning, our team of professionals is here to help. Making a choice as to who will represent you if an important decision and should not be taken lightly. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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