The U.S. government does not treat tax offenses lightly. They have extensive resources at their disposal and employ multiple methods for catching potential tax evaders. Those who are convicted of tax evasion can face devastating civil and criminal penalties including incarceration and restitution.
For example, two real estate professionals recently convicted of tax crimes are facing potential prison sentences and the assessment of expensive fines. Further, in 2021, reality television stars Todd and Julie Chrisley were sentenced to prison for defrauding banks and evading their income taxes. In order to avoid similar penalties, defendants who are accused of tax offenses should seek assistance from our legal team.
Seek guidance and support from our Dual-Licensed Tax Lawyers & CPAs at the Tax Law Offices of David W. Klasing by calling (800) 681-1295.
Real Estate Professionals Convicted of Tax Crimes
In recent years, there have been notable cases involving real estate professionals who have been convicted of tax crimes. These cases act as a reminder that these individuals are not immune to the scrutiny of tax authorities and the potential consequences of evading tax obligations.
The first case involves Jeffrey Donaldson, a mortgage loan officer from Florida. Donaldson worked for Movement Mortgage, LLC, and CrossCountry Mortgage, LLC. In May 2023, he pleaded guilty to evading federal income taxes on over $750,000 of his income earned from 2015 to 2018. He submitted false withholding certificates to his employers and did not file income tax returns. Donaldson’s actions caused the U.S. government to incur a tax loss of over $150,000. His sentencing is pending, and he could face up to five years in prison, supervised release, restitution, and fines.
Another example of a real estate professional being punished for tax evasion is the case of a Michigan real estate developer named Scott Chappelle. Chappelle is an attorney and former certified public accountant. He acted improperly by spending money on various personal expenses, including plastic surgery, a lakeside house, multiple cars, and a 62-foot yacht, while falsely claiming financial hardship to the IRS. As a result, Chappelle received a 38-month prison sentence for tax evasion. In addition to the prison sentence, he was ordered to pay $1.2 million in restitution, serve three years of supervised release, and pay a $150,000 fine.
The cases of Donaldson and Chappelle demonstrate that tax offenses are treated very seriously, and the consequences of such activities can be substantial. If you have been accused of tax crimes, it is crucial that you hire our Dual-Licensed Tax Lawyers & CPAs to determine the appropriate course of action. Our experienced legal team can help navigate each stage of your case so that you may avoid criminal penalties.
Reality Stars Sentenced to Prison for Tax Evasion
Todd and Julie Chrisley are a married couple who gained fame through their reality television show called “Chrisley Knows Best.” The show follows their lives as a wealthy family living in Atlanta, Georgia.
In 2021, Todd and Julie were sentenced to twelve and seven years in federal prison for fraud and tax evasion. During a trial that lasted nearly three weeks, it was revealed that they defrauded community banks of over $30 million in loans and evaded federal income taxes for multiple years. The Chrisley’s case serves as another cautionary reminder that any attempts to defraud the Internal Revenue Service (IRS) can result in severe penalties, including lengthy prison sentences and costly fines.
Common Examples of Tax Evasion
Tax evasion comes in many different forms. The following are common examples of tax offenses that you can face criminal penalties for:
Underreporting Income
Many businesses and individuals commit tax evasion by intentionally underreporting their income. This is done in order to reduce their tax obligations. Underreporting income may involve hiding cash transactions, inflating expenses, or manipulating financial records.
Offshore Tax Evasion
Offshore tax evasion is also very common. This form of evasion typically occurs when certain parties open offshore accounts or use offshore entities to hide their income and assets. In doing so, they may avoid paying taxes in their home country.
Several countries with low tax rates serve as popular havens for offshore evaders. These countries include the British Virgin Islands, Switzerland, Bermuda, and the Cayman Islands.
Shell Companies and False Transactions
Also, many individuals engage in tax evasion by depositing income in shell companies and engaging in false transactions. By moving their money around, evaders can obscure the true source of the income at issue.
Improper Use of Deductions and Exemptions
Furthermore, some people evade their taxes by improperly taking advantage of deductions and exemptions. This form of evasion can include inflating expenses, claiming personal expenses as business expenses, or misrepresenting eligibility for certain tax benefits. By doing so, taxpayers may reduce their taxable income.
Paying Employees Under the Table
Employers may evade their taxes by paying employees under the table. This refers to the practice of paying employees in cash without reporting the wages to the proper authorities. This is done so that employers may avoid payroll taxes and any other employment-related taxes that may be levied against them. Additionally, failing to issue W2’s or 1099’s while paying your employees in non-traceable cash can be charged as aiding and abetting your employee’s income tax evasion.
Smuggling
Tax evasion can also occur through smuggling goods or engaging in illegal activities where taxes are not paid. Examples include smuggling contraband goods, engaging in illegal gambling, or participating in illicit drug trade. Those who engage in this form of tax evasion often face severe penalties for their misconduct.
False Residency or Citizenship
Finally, tax evasion can also occur when individuals claim false residency or citizenship. This form of evasion is often perpetrated in order to take advantage of favorable tax laws. If you have been accused of claiming false residency or citizenship, then our legal team can help build your defense.
If You Need Help with Your Tax Issues, Reach Out to Our Lawyers for Support
After being accused of a tax crime, get help from our Dual-Licensed Tax Lawyers & CPAs by calling the Tax Law Offices of David W. Klasing today at (800) 681-1295.
Avoiding Criminal Tax Prosecution where you have a History of Income Tax Evasion.
If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of 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, KovelCPAs 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.
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More Commonly Asked Tax Audit Questions
- How should Tax Audits be Handled by Criminal Tax Counsel?
- How to survive audit when I cheated on return being audited
- What is an eggshell audit?
- What is a reverse egg shell audit?
- Why is a reverse egg shell audit dangerous for a taxpayer?
- Warning signs of a criminal referral from an IRS audit
- Effective tax defense counsels goals in an egg shell audit?
- How are the 4 goals and outcomes 1 and 2 best obtained?
- What are the possible outcomes of an egg shell audit?
- Is it my right to know why I was selected for examination?
- What can I do to prepare for an audit?
- What is an IRS civil examination?
- How IRS decides which tax returns are audited
- What are my appeal options if I disagree with IRS?
- What are my basic taxpayer rights if the IRS audits me?
- Options if I am unable to pay at the conclusion of audit
- What a 30 or 90-Day Letter from the IRS means
- What is involved with appealing disagreements?
- Rights to disagree with IRStaxauditor’sss findings
- Can I stop the IRS from repeatedly auditing me?
- Can I have the examination transferred to another area?
- Can I record my IRS interview and is it a good idea?
- How many years of returns are at risk during an audit?
- Common reasons for the IRS to conduct a tax audit
- How to avoid negative consequences from an IRS interview
- Have to agree to interview by taxing authority directly?
- Are all audits the same?
- What should I do if the IRS is investigating me?
- What if I don’t respond to a taxing authority audit notice
- Your rights during an IRS tax audit
- Risks of attending an IRS audit without a tax lawyer
- Most common audit technique used by taxing authorities
- Don’t go into an IRS audit without representation
- Why hire an attorney to represent me in an audit?
- Why hire David W. Klasing to represent me in an audit
Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
- Guilty of tax obstruction by backdating documents?
- To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
- Help! The Document I Gave the IRS Had False Information
- Tax crime aiding or assisting false return IRC §7206(2)
- What is the crime known as tax obstruction § 7212?
- What is the difference between tax perjury and tax evasion?
- What is the tax crime commonly known as tax perjury?
- What is a Klein Conspiracy?
- Increased possibility of civil action in IRS investigation
- Am I Guilty of Tax Evasion if the Law is Vague?
- What happens if the IRS thinks I committed tax crimes?
- What are ways to defend against a tax evasion charge?
- Difference between criminal tax evasion and civil tax fraud
- What accounting method does the IRS use for tax fraud
- Can I Change Accounting Method to the Accrual Method
- What is the willfulness requirement for tax evasion?
- I didn’t know I committed tax fraud. Can I get off?
- Concealed assets from IRS. Can I avoid tax evasion charges
- How government proves I willfully engaged in tax evasion
- What is the venue or court where a tax crime case is heard?
- Must the IRS prove tax crimes beyond a reasonable doubt?
- Is it a crime to make false statements to the IRS?
- Will the IRS overlook my tax evasion if it’s minor?
- Failed to tell IRS about my nominee account
- Audit risk with cash based business transactions
- How to defend a client charged with tax evasion
- Is it tax evasion if I didn’t file income tax return?
- Government says I attempted to evade my taxes. Now what?
- I forgot to pay my taxes or estimated tax. Is this a crime?
- Government proof I “willfully” failed to pay taxes
- 5 Ways to Respond to Tax Evasion Charges
- Being audited after using a tax professional
- Rules for what an IRS agent can do while investigating me
- How tax preparers, attorneys and accountants are punished
- How the IRS selects tax crime lead for investigation
- How does the IRS prosecute suspected tax crimes?
- Does IRS reward informant leads for suspected tax crimes?
- How the government proves deficiency in a tax evasion case
- Do prior tax crimes factor into new IRS tax convictions?
- Requesting conference before investigative report is done
- Requesting conference after IRS Special Agent Report
- What are my rights during an IRS criminal investigation?
- Avoid prosecution for tax crime with voluntary disclosure?
- Defense tactics that make it hard for to prove willfulness
- How a tax attorney can stop your criminal tax case?
- What can you generally tell me about tax crimes?
- Continuing filing requirement with investigation pending
- Federal criminal code crimes that apply to tax issues
- Penalty for making, subscribing, and filing a false return
- CID special agent’s report for criminal prosecution
- What is the discovery process in a criminal tax case?
- What the IRS includes in indictment for tax case
- What is the hardest element of a tax crime to prove?
- IRS methods of gathering evidence to prove tax crime
- What does a grand jury do in IRS tax crime prosecution?
- Failure to keep records or supply information
- Failure to make a return, supply information, or pay tax
- What is attempting to evade payment of taxes?
- What is income tax evasion and how is it punished?
- What is attempted income tax evasion?
- What is the crime of failure to pay tax? What is punishment
- Crime of making or subscribing false return or document
- Criminal Investigation Division investigation tactics
- Tax crimes related to employment tax forms and trust funds
- Tactics to defend or mitigate IRS criminal tax charges
- How the IRS generates leads about suspected tax crimes
- What is the crime ”evasion of assessment” of tax?
- Specific examples of “attempting” to evade tax assessment
- What is the so-called Spies evasion doctrine?
- Does overstating deductions constitute tax evasion?
- Is it tax evasion if my W-4 contains false statements?
- IRC §7201 attempt to evade vs. common-law crime of attempt
- What are the penalties for Spies tax evasion?
- How government proves a taxpayer attempted tax fraud
- What is a tax that was “due and owing.”
- What is evasion of assessment for tax liability?
- Is evasion of assessment different from evasion of payment
- Does the IRS have a dollar threshold for tax fraud?
- What is the IRS burden of proof for tax fraud convictions?
- Are Tax Laws Constitutional?
- What is the source of law that defines tax evasion?
- Does section 7201 create two distinct criminal offenses?
- Does tax evasion definition include partnership LLC
- What if I helped someone else evade taxes?
- Is it illegal to overstate deductions on my tax return?
- Is it illegal to conceal bank accounts from the IRS?
- Do later losses justify prior deductions?
- Common reasons the IRS and DOJ start investigations
- What is the Mens Rea component of tax crimes?
- What is a proffer agreement and what are the risks?
- Why to have an attorney to review a proffer agreement
- Why enter into a proffer agreement?
- Limited use immunity from proffer agreements
- Difference between civil and criminal fraud allegation
