According to a Department of Justice press release, an Alabama man recently pleaded guilty to tax evasion and now faces several years in federal prison. This story should serve as a reminder to taxpayers who think that tax evasion is a victimless crime that the IRS and Department of Justice are actively prosecuting tax evasion cases and a great majority of those criminal charges result in a federal prison sentence. If you have failed to file a tax return for one or more years or you have taken a questionable position on a filed tax return, it is in your best interest to contact an experienced tax attorney to begin the process of coming into compliance.
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Defendant Failed to File Tax Returns and Moved Money to Europe
Court records reveal that the defendant, Ivan Scott Butler, worked as a salesman of extended vehicle warranties. He also worked as a consultant for the automobile industry. Beginning in 1993, Butler stopped filing U.S. individual tax returns and in 1998, he began moving assets overseas. For instance, in 1999, Butler moved precious metals and other investment assets to accounts in Switzerland. He took further steps to conceal the assets that he had moved overseas by investing in offshore insurance policies that were not immediately traceable back to Butler. The practice of using insurance policies to disguise vehicles intended for investment activity is a practice oftentimes referred to as “insurance wrapping”.
By 2014, Butler had moved a great deal of money overseas without detection by the IRS and without paying the income taxes associated with the funds. Butler converted a portion of his insurance annuities to precious metals and instructed that they are physically shipped to him back in the United States.
The IRS and Department of Justice estimate that Butler caused a total tax loss of more than $1,093,400. Butler will be sentenced later this year and faces up to five years in federal prison for the tax evasion charge. Additionally, Butler will likely be ordered to serve a sentence of supervised release upon the completion of his physical incarceration. Finally, Butler will almost certainly be ordered to pay restitution to the IRS in the amount of tax loss he is responsible for.
The Importance of Coming into Tax Compliance
Although the defendant in the story above blatantly disregarded federal tax laws and took actions that obviously were intended to skirt the U.S. tax system for decades, the IRS and Department of Justice prosecute tax fraud and evasion cases for much less. Some taxpayers feel that the failure to file tax returns or pay the correct amount of tax is a victimless crime. But regardless of how individuals may feel about our federal tax system, the failure to comply with its laws can and does result in federal criminal prosecution and the possibility of jail time.
The defendant’s conduct also exemplifies a particular type of illegal offshore tax conduct. For over a decade, the IRS and Department of Justice have been focusing in on those U.S. taxpayers who have assets in overseas accounts but have not annually declared them as required under the Foreign Bank Account Reporting (FBAR) laws. With an increasing number of countries participating in information-sharing agreements with the U.S., it is only a matter of time until the IRS discovers the remaining U.S. taxpayers with undeclared foreign financial accounts.
If you have failed to file tax returns in the past or if you have filed a tax return that has omitted income, overstated deductions, or is otherwise incorrect, the IRS and state taxing authorities have established ways to go about coming back into compliance. An experienced tax attorney will meet with you, walk through your particular set of facts and circumstances, and make a strategy recommendation. After you and your tax attorney agree on a go-forward strategy, you won’t be alone in your interactions with the IRS.
Note: As long as a taxpayer that has willfully committed tax crimes 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 prosecution, the taxpayer can be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously receive a break on the civil penalties that would otherwise apply. It is imperative that you hire an experienced and reputable tax defense attorney to take you through the voluntary disclosure process. 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. See our Testimonials to see what our clients have to say about us!
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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 examination or are in need of 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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