According to a Department of Justice press release, an Arkansas man was recently sentenced to serve 36 months in federal prison after taking various steps to fraudulently avoid paying over $1 million of tax debt. The key takeaway from this story is that if you have failed to file a tax return for one or more years or have fallen behind on tax payments to the IRS or state tax authorities, it is in your best interest to consult with an experienced tax defense attorney to determine the best strategy to come back into compliance. The consequences of being caught dodging taxes is too great to continue to ignore.
Defendant Failed to Pay His Tax Bill and Concealed His Ability to Pay
Court records reveal that James Brassart of Bentonville, Arkansas filed a federal income tax return for the 2006 tax year in which reported over $1.5 million of taxable income and a tax liability of nearly $500,000. In the subsequent years, Brassart took steps to avoid the payment of his tax obligations. Among other strategies, he used nominee corporations to continue his business functions while representing to the IRS that he did not have the funds necessary to satisfy his tax debt.
Between 2010 and 2016, Brassart filed several fraudulent bankruptcy cases in which he tried to have his federal tax debt discharged. In his bankruptcy applications, Brassart failed to report his ownership in the nominee entities that he had been using to conceal his true income and wealth. The government estimated that Brassart caused a tax loss of more than $1.3 million through his failure to pay his 2006 tax due, as well as the multiple attempts to have his federal tax debt eliminated in bankruptcy.
In addition to being sentenced to three years in prison, Brassart was ordered to serve three years of supervised release upon the completion of his physical incarceration. Additionally, Brassart was ordered to pay $1,360,682 in restitution.
Coming into Compliance Once You’ve Fallen Behind on Your Tax Obligations
Falling behind on tax debt is not uncommon. For many taxpayers, especially those who earn an income through self-employment, may find themselves unable to come up with tens of thousands of dollars (or more) come tax time. Oftentimes, it is easy to simply forget about the tax debt. By the time that the IRS contacts taxpayers for delinquent tax debt, the amount of interest and penalties generally makes the balance impossible to pay in a lump-sum and taxpayers may turn to illegal means to get out of the situation.
Enlisting the assistance of an experienced tax defense attorney is strongly advised when you have failed to file a return or have failed to pay your tax debt in a timely manner. There are several strategies that can be utilized to come into tax compliance when you have fallen behind. Your seasoned tax lawyer will help you identify the exposures in your case and offer advice as to the best next steps in your effort to get right with the government. The IRS has recently increased its enforcement headcount and is expected to step up its crackdown on taxpayers who have failed to file a tax return or have failed to pay as required. Seeking the assistance of a tax defense attorney will ensure that you do not have to go up against the IRS alone.
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) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
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