Defendant Candy Miller, 40, former owner of a Wilmington, DE-based psychic readings business, was recently sentenced by U.S. District Court Chief Judge Leonard P. Stark to one year plus one day in prison for tax fraud. I wonder if she saw it coming? Prosecutors stated that Miller filed multiple false returns over a three-year period, underreporting over $1 million in income and resulting in a tax loss exceeding $337,000.
“Criminal tax laws are designed to protect the public interest in preserving the integrity of the nation’s tax system,” said David C. Weiss, U.S. Attorney for the District of Delaware, when Miller was sentenced on July 13, 2018.
“Here,” he continued, “the source of the unreported income came from unwitting customers whom Miller duped,” referring to Miller’s practice, described in a Department of Justice press release, of telling customers she was anonymously donating to charities on their behalf. Miller’s customers were led to believe that these donations would “remove the negativity from their lives.” In reality, none of the promised donations were ever made, with Miller instead choosing to “spend all the money on personal expenses.”
By the time the defendant was charged and sentenced, Miller had underreported her income to the Internal Revenue Service (IRS) by a total of approximately $1,074,000 over the course of three years, filing a false income tax return for the tax years 2010 through 2012. Miller’s failure to report the income caused a tax loss of approximately $337,430.
By knowingly and intentionally failing to timely report 100% of her taxable income to the IRS, Miller violated 26 U.S. Code § 7206 (fraud and false statements), specifically 26 U.S. Code § 7206(1) (declaration under penalties of perjury), which makes it a criminal offense to willfully file a tax return – or, for that matter, any related “statement, or other document” – that contains information the filer knows to be inaccurate. In Miller’s situation, the inaccuracy pertained to the amount of income she was earning. Similar charges are frequently filed against CPAs and other tax professionals under 26 U.S. Code § 7206(2) (aid or assistance), which makes it a crime to help a taxpayer prepare and file a false return. (For additional information on that subject, refer to our article on CPAs aiding or assisting the filing of a false return, or see our overview of the tax crime aiding or assisting a false return.)
Believe it or not, Miller’s yearlong sentence represents relative leniency, considering the maximum three-year sentence established by the statute. Additionally, the statute allows sentencing courts to impose a fine of up to $100,000 (or up to $500,000, if the defendant is a corporation). Note that criminal fines are distinct from any orders to pay IRS restitution, which can add hundreds of thousands of dollars to a tax defendant’s final bill.
“Miller’s sentence is a reminder,” said Guy Ficco, IRS Criminal Investigation (IRS-CI) Special Agent-in-Charge, “that IRS-CI is working to make sure that all taxpayers file and pay their fair share of taxes.”
If you have unfiled tax returns and need to get caught up on tax filings, are concerned about the information you supplied on a tax return, or are undergoing a tax audit or criminal investigation, you need immediate support from a skilled and experienced tax evasion attorney. At the Tax Law Office of David W. Klasing, we have more than 20 years of experience representing individuals and businesses accused of failing to report their income or file the necessary returns. With offices throughout Northern and Southern California, we are conveniently positioned to serve taxpayers throughout the state. For a reduced-rate consultation, contact our tax firm online, or call the Tax Law Office of David W. Klasing at (800) 681-1295 today.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
Helpful Q and A libraries