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Alabama Employee Steals Half of a Million Dollars from Employer, Indicted on Tax and Wire Fraud Charges

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    According to a Department of Justice press release, Alita Baker Edeker, of Valley, Alabama, allegedly engaged in the theft of over a half of a million dollars from her employer. The criminal activity, alleged to have occurred between 2007 and 2014, involved Edeker directing customer payments to her own personal financial accounts instead of into her employer’s business accounts. In an effort to conceal her crimes, Edeker is alleged to have made false statements and misrepresentations in her employer’s financial books and records. Finally, Edeker failed to report the amounts that she stole as income on her federal tax returns for the years of her alleged crimes.

    Late last week, a federal grand jury sitting in Montgomery, Alabama returned an indictment for filing false tax returns and wire fraud. If she is convicted, Edeker faces up to 20 years in a federal prison for each wire fraud count and up to three years in prison for each count of filing a false tax return. In addition to prison time, Edeker may also receive financial sanctions such as fines, penalties, and restitution.

    Many taxpayer’s associate underreporting income for tax purposes with the act of omitting wage income, commonly reflected on a Form 1099 or W-2. But income isn’t limited to income earned through the provision of services. The Internal Revenue Code (the “Code”) states that gross income “means income from whatever source derived”. This means that any succession to wealth is generally includable in gross income unless there is a specific exception within the Code.

    Many fraud cases prosecuted by the Department of Justice have a tax fraud component. This is because when a person steals money, they have technically had an accession to wealth and such amount should be includable as gross income for that particular year. When the DOJ has determined that a crime has been committed that enriched the perpetrator, they will look to the individual’s tax return to determine whether the stolen amount was reflected.

    Interestingly enough, those who have enriched themselves through the commission of a crime are generally permitted to take deductions related to the illegal activity. In Commissioner v. Tellier, the U.S. Supreme Court upheld a taxpayer’s ability to offset income earned through activities that broke federal securities laws with the expenses incurred for his legal defense. The Court reasoned that providing himself with an adequate legal defense team was an ordinary and necessary business expense under the Code.

    When to Contact a Tax Attorney

    Criminal tax defense attorneys are not just for those who are accused of having committed an underlying crime, such as wire or tax fraud. Those taxpayers who have been notified that they will be the subject of an IRS or state taxing authority inquiry such as an audit or investigation should contact an experienced tax defense attorney as soon as possible. A tax defense lawyer can ensure that you only share the information and documentation that is required by law and that you do not make statements that can be used against you in the future.

    The tax and accounting professionals at the Tax Law Offices at David W. Klasing have represented taxpayers from all walks of life, including businesses facing tax audits to individuals under criminal investigation by federal or state taxing authorities. Our team of zealous advocates will develop and implement a strategy to mitigate the negative effects that can be associated with a tax audit, investigation, or prosecution. Don’t lose sleep over potential tax troubles. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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