Philadelphia Restaurant Owners Indicted on Tax Evasion Charges
According to a Department of Justice press release, the owners of a popular Philadelphia, Pennsylvania cheesesteak restaurant were recently indicted by a federal grand jury on charges of tax evasion, conspiring to defraud the IRS, and filing false tax returns. This story involves facts that are common to many small and medium-sized businesses that attempt to lower their tax liability by understating income, overstating deductions, or attempting to evade the payment of payroll taxes. If you have failed to properly file or pay your taxes for one or more years, it is in your best interest to contact an experienced tax defense attorney today to come into compliance before the IRS initiates an examination or criminal tax investigation.
Defendants Accused of Cash Skimming and Paying Employees Under the Table
Court documents reveal that Anthony Lucidonio Sr. and Nicholas Lucidonio were the owners and operators of Tony Luke, a cheesesteak staple in South Philadelphia. Federal prosecutors allege that between 2006 and 2016, the father-son duo underreported income by more than $8 million by skimming cash from the business and only depositing a small portion of cash receipts. The Lucidonio’s also failed to report the proper amount of income on their individual income tax returns.
In addition to artificially lowering their net income by skimming cash from the business, the Lucidonio’s are also accused of paying their employees only a portion of their wages properly. Thus, only a small amount of an employee’s wage was reported to the IRS and only a small amount of employment tax was paid. The remainder of employees’ wages were paid “under the table” in cash without the proper reporting or payment of employment tax to the IRS via W2 or 1099.
Lastly, the pair is accused of amending prior-year tax returns to correct a portion of the income that had been skimmed. But even in that effort, the Lucidonio’s offset any additional tax liability with fabricated expenses.
If convicted, the Lucidonio’s face up to five years in prison for each count of tax evasion and conspiracy count and up to three years in prison for each count of filing a false tax return. The pair would also likely be ordered to serve a period of supervised release upon their release from prison. Lastly, they would likely be ordered to pay restitution to the IRS, representing the tax loss caused.
Bringing Your Business into Tax Compliance
The fact pattern above is far too common among businesses that aim to illegally lower their tax bill. Besides the outright illegality of their actions, the obvious snag in such a strategy is generally the ease at which the IRS can get wise to the effort. The IRS has multiple methods to audit and investigate suspected business cash skimming and the payment of employees under the table. One such method is in-person overt or covert observation of a business’s cash intake over a period. This helps extrapolate average daily, monthly, and yearly revenues.
If your business has underreported income, overreported expenses, or have paid employees “under the table”, it is in your best interest to contact an experienced tax defense attorney to develop a strategy to come into compliance. Working with your tax lawyer, you will layout the potential noncompliance of your business and jointly determine the best plan of action to get right with the government. A major benefit of seeking the assistance of a tax attorney is your total representation before the IRS or state tax authorities.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including cash skimming and non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
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