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.
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.
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:
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.
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.
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 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.
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.
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.
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.
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.
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.
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