There are multiple ways that individuals can commit tax evasion. For instance, someone may attempt to evade their taxes by hiding unreported taxable income from the Internal Revenue Service (IRS) in offshore accounts. Furthermore, as in the case of Charles Kirkland, tax obligations may also be dodged by misreporting information on your returns.
Kirkland filed tax documents that falsely alleged he had lost millions of dollars in investments in solar equipment. The invented losses were then sold to tax preparers who would use them as deductions on their clients’ returns. Kirkland managed to acquire $45 million for his illegal tax fraud scheme. However, after being caught and convicted, the government sentenced him to nine years in prison and ordered him to pay over $51 million in restitution.
If you suspect you may be accused of a tax crime, get help from our experienced Dual Licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing by calling (800) 681-1295 or clicking here to schedule a reduced rate initial consultation online.
Taxpayer in Paradise Valley Sentenced to Prison for Filing False Documents
A Paradise Valley man named Charles St. George Kirkland has been sentenced to nine years in prison and fined $1 million for his involvement in a $50 million tax fraud scheme. The sentencing took place in U.S. District Court in Seattle, as announced by the Department of Justice. U.S. Attorney Nick Brown described the sentence as significant and emphasized that it serves as a deterrent against such dishonesty and deceit.
Kirkland, aged 57, had pleaded guilty in January to three counts of aiding or assisting in filing fraudulent tax documents. As part of the plea agreement, he is required to pay over $51 million in restitution. Shortly after entering his guilty plea, Kirkland and his divorce proceedings, in which they agreed that the wife would assume ownership of their real estate, cars, and their 10,000-square-foot Arizona home. The government is now seeking these assets to fulfill Kirkland’s restitution obligation.
The tax fraud scheme orchestrated by Kirkland involved filing false tax claims, alleging losses exceeding $135 million from investments in solar equipment. These fabricated losses were then sold to a network of tax preparers, who listed them as deductions on their clients’ tax returns. In return, Kirkland charged these taxpayers 90% of the fraudulent refunds obtained using the fake losses. Overall, Kirkland managed to collect $45 million through this scheme, causing a loss of over $50 million to the U.S. Treasury.
The case highlights the magnitude of Kirkland’s fraudulent activities and the severity of the consequences he now faces. The sentencing and accompanying fine aim to demonstrate the serious penalties imposed on individuals engaged in such fraudulent behavior. The U.S. Attorney’s Office for the District of Washington expressed its commitment to pursuing Kirkland’s assets to ensure his restitution obligation is met.
What are the Different Ways that People Cheat on Their Taxes?
Tax evasion occurs when someone intentionally sidesteps their tax obligations. This crime can occur in many different forms. The following are all examples of ways that people cheat on their taxes:
Underreporting Income
One common way individuals cheat on their taxes is underreporting their income. This involves deliberately failing to report or inaccurately reporting income earned through various sources. For instance, some individuals may omit cash payments received, such as tips or earnings from side jobs, from their tax returns. Others may manipulate financial records or create fraudulent invoices to understate the income they have earned.
Overstating Deductions
Another way people attempt to cheat on their taxes is by overstating deductions. Deductions are legitimate expenses that can be claimed to reduce taxable income. However, some individuals may inflate or falsify deductions to artificially reduce their tax liability. This can involve exaggerating business expenses, charitable contributions, or medical expenses. By inflating these deductions, individuals aim to lower their taxable income and pay less taxes than they should.
Offshore Tax Havens
Using offshore accounts or entities in tax havens is a method some individuals employ to cheat on their taxes. By moving funds or assets to jurisdictions with low or no taxes and strict banking secrecy laws, individuals seek to conceal offshore taxable income and assets from the IRS. Offshore tax evasion often involves establishing shell companies or trusts to hold undeclared assets, allowing individuals to hide their true ownership and attempt to evade reporting U.S. taxable income.
Fictitious Expenses
Fictitious expenses involve creating false records or receipts to claim deductions for expenses that do not actually exist. Individuals may generate fake invoices, receipts, or contracts to support deductions for expenses they never incurred. For example, someone might create fictional business expenses or inflate the cost of personal expenses to inflate deductions and reduce their taxable income.
Unreported Cash Transactions
Cash transactions can provide opportunities for tax evasion since they are often difficult to trace. Some individuals may intentionally omit or underreport cash transactions, such as cash sales in businesses or payments received for services rendered. By conducting transactions in cash and not reporting them, individuals aim to evade taxes on the income generated from these activities.
Unreported Foreign Income
Individuals with income generated from foreign sources are required to report and pay taxes on that income in many jurisdictions. However, some people may attempt to cheat on their taxes by not reporting foreign income or assets. This can involve failing to disclose foreign bank accounts, investments, or rental income earned abroad. Individuals may sometimes use complex structures involving offshore entities to hide income and assets from tax authorities.
Paying Employees “Under the Table”
Finally, some employers engage in employment tax evasion by paying workers “under the table” or underreporting wages to avoid payroll taxes and other employment obligations. Cash payments or payments made outside the official payroll system are not recorded or reported to tax authorities. This practice allows employers to avoid withholding taxes, paying payroll taxes, and providing employment benefits mandated by law.
Our Legal Team Can Offer Help with Your Criminal Tax Exposure Concerns
If you are concerned about a potential criminal tax issue, seek help from our experienced Dual Licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing by calling (800) 681-1295.
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.
We Are Here for You
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) California based satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad,Sacramento. We also have satellite offices in Las Vegas Nevada, Salt Lake City Utah, Phoenix Arizona & Albuquerque New Mexico.
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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
Questions About Delinquent Payroll Taxes and Trust Fund Recovery Penalty
- What happens if an employer continues to incur new payroll tax liabilities?
- California Employment Taxes Basics
- How Does the IRS Develop an Employment Tax Fraud Case from the First Indication of Fraud to a Criminal Indictment?
- Can more than one person be considered responsible by IRS
- How unpaid employment tax payments are allocated
- When a corporate officer is considered a responsible party
- Examples of trust fund recovery penalty determinations
- Failing to pay employment taxes after notice is given
- How to determine responsible person for trust fund recovery
- Assessing trust fund recovery penalty and option to appeal
- What is the trust fund recovery penalty?
- What are the penalties for failure to pay employment taxes
- When am I considered liable for company’s employment tax
