According to a Department of Justice press release, an anesthesiologist from Pennsylvania was sentenced by a federal judge to serve over two years in prison after being convicted on charges of filing a false tax return. This story should serve as a reminder to taxpayers who have taken positions on their prior tax returns that could be considered unsupportable that the IRS will refer tax returns that it deems to have badges of fraud to their Criminal Investigations team. Taxpayers with such a fact pattern should contact a tax defense attorney as soon as possible.
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Doctor and Wife Filed False Returns that Omitted Income
Court documents reveal that James Allen Jr. knowingly and willfully filed false tax returns for both himself and his wife on more than 16 occasions. The tax returns in question did not include more than $3 million of earned income. In addition to the filing of the false tax returns, Allen took made various efforts to conceal the couple’s income streams and liquid assets from the government. These steps, very elaborate in nature, included funneling money through foreign bank accounts to buy property and investing in assets that are difficult to trace like cryptocurrency. Prosecutors alleged that Allen’s illegal actions caused the U.S. to suffer a tax loss of more than $900,000.
Allen was sentenced to serve 30 months in a federal prison. Additionally, he will be required to serve one year of supervised release upon his release from physical incarceration. Finally, Allen was ordered to pay back nearly $1.1 million in restitution to the IRS.
Key Takeaways and When to Seek Help from a Tax Defense Lawyer
The defendant’s conviction and sentencing from the story above evidences the fact that no matter your profession, the IRS and state taxing authorities will pursue those who willfully violate tax laws. Although the IRS is under budgetary constraints, they have sophisticated software that can detect anomalies in tax filings. When such anomalies are detected, IRS personnel make a determination as to whether badges of fraud are present and eventually decide whether or not to hand the case over to the Criminal Investigations team and if necessary, to the Department of Justice for potential criminal tax prosecution.
If you have taken positions on your prior tax returns that are not supportable or have failed to file a tax return for one or more years, it is in your best interest to contact an experienced tax attorney. Every taxpayer’s situation is different, and your tax lawyer will work with you to understand the intricacies of yours. Together, you will develop a plan that aims to mitigate the potential negative consequences of tax noncompliance while working toward rectifying the situation.
Note: As long as a taxpayer that has willfully committed tax crimes self-reports the tax fraud through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax prosecution, the taxpayer can be brough back into tax compliance and receive a pass on criminal prosecution. It is imperative that you hire an experienced and reputable tax defense attorney to take you through the process.
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See our FBAR Compliance and Disclosure Q and A Library
See our Foreign Audit Q and A Library
Contact an Experienced Tax Attorney Today
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax audit, criminal tax investigation or are in need of absolutely kosher and legal tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.
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