In March, a Brooklyn resident pled guilty to charges including insider trading and tax evasion after a years-long battle over the terms of a plea agreement. The defendant faces sentencing in July where he could receive up to 25 years in prison, not to mention substantial fines and restitution.
The government takes any effort to obscure income, whether legally or illegally obtained, as a personal affront and has ramped up its efforts to identify and prosecute tax evaders in recent years. Even honest taxpayers with minor mistakes in their past tax disclosures can get swept up in aggressive government action if they do not act in time to prevent it.
To learn about the steps you can take to build up your defenses and come into compliance with the federal tax code, contact the Dual Licensed Criminal Tax Defense Attorneys and CPAs at the Tax Law Offices of David W. Klasing today. We can be reached by phone at our offices at (800) 681-1295 or schedule online today.
Defendant in New York Tax Evasion Case Faces up to 25 Years in Prison
Last month, a New York City man pled guilty in federal court to two counts of insider trading and tax evasion. Jason Peltz, 39, entered his plea in Brooklyn’s federal district courthouse after finally reaching a plea agreement with prosecutors after a lengthy period of negotiations. Peltz had previously pled not guilty to the charges.
The charges against Peltz stemmed from his initial act of trading on securities using “material non-public information,” which, by law, is insider trading. Specifically, Peltz purchased stock in chemical manufacturer Ferro Corp after learning from a friend that it had received a takeover bid. Peltz also shared the information about the takeover bid with others. Recipients of Peltz’s tip included a reporter who wrote an article about the bid offer. The article resulted in an increase in Ferro Corp’s stock price. The reporter does not face prosecution for any charges at this time.
Peltz and his source within Ferro Corp received significant financial benefits in return for sharing the tip with other co-conspirators who profited from the trades. The payments to Peltz continued over a period of time. At Peltz’s direction, the payments were made to corporate and nominee bank and credit card accounts, allegedly to conceal these illicit sources of income from the IRS. In statements made under penalty of perjury to the IRS in 2017, Peltz claimed that he had had no income since December of 2015.
As part of his plea, Peltz submitted a written statement to the court, which was read aloud by U.S. District Judge Nicholas Garaufis. In the statement, Peltz admitted that he purchased the securities based on the information he received from a friend and that he knew that trading on the information was against the law when he made the transaction.
Peltz is scheduled to be sentenced on his guilty plea in July. He faces a maximum prison sentence of up to 25 years. His sentence may also include the forfeiture of all proceeds from the illicit trades or payments from co-conspirators and restitution to the IRS for the unreported tax debt. According to the Department of Justice’s press release, this figure could exceed $1 million.
The Government Is Sending a Message with the Peltz Case
Peltz’s prosecution and plea negotiations were handled by the United States Attorney for the Eastern District of New York, which is viewed by many as the preeminent prosecutorial body for financial crimes in the country. The FBI’s New York field office and the IRS Criminal Investigations Division (IRS-CI) were also involved in handling the case.
Breon Peace, the U.S. Attorney for the Eastern District of New York, made sure to mention the significance of both the insider trading and the tax evasion in his public statement on the case. Said Peace, “With today’s plea, Peltz admitted to trading on material non-public information about a publicly traded company to line his own pockets and also to lying about his income to avoid paying taxes on a substantial tax liability.” Peace went on to speak directly to other potential targets of his office. “This Office will vigorously prosecute traders who seek to cheat the system, harm the investing public and undermine the integrity of our financial markets. We will hold accountable those who lie to avoid paying their fair share of taxes.”
Thomas Fattorusso, the Special Agent-in-Charge of the IRS-CI operation, also made it clear that this type of action should be expected out of his department. “Plain and simple, it’s illegal to use non-public information to buy and sell stocks. Doing so manipulates the markets and can have detrimental effects on the wallets of individuals who play by the rules,” said Fattorusso. “But this defendant didn’t stop there; he made significant financial gains and then claimed that he had no income in an effort to blatantly evade taxes.”
The Time to Protect Yourself from the IRS Is Now
If you have undisclosed tax noncompliance, it is in your best interest to act early instead of waiting and hoping that the government won’t notice. Recent IRS-CI activity like the type observed in the Peltz case suggests that the government is likely to get more aggressive in tracking down and identifying noncompliance.
Even if your noncompliance was an honest mistake, you could still get caught up in an IRS audit or criminal investigation. These invasive government actions can be time-consuming, stressful, and have a negative impact on your reputation and ability to secure credit. We urge you to reach out to a Tax Attorney as soon as possible to fend off the negative consequences of undisclosed tax issues in your past filings.
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 disclosurebefore 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.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
The Tax Law Offices of David W. Klasing Can Help You with Your Tax Issues Today
To get immediate and necessary help from Dual Licensed Tax Lawyers and CPAs, call the Tax Law Offices of David W. Klasing today at (800) 681-1295 or schedule online today.
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 IRS tax auditor’s 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 allegations
Questions and Answers on Unfiled Back Taxes
- What are the common issues that non-filers face?
- Risk of audit after filing delinquent prior year returns
- Can substitute return deficiency be discharge in bankruptcy
- Substitute return modified by subsequent delinquent return?
- Do I file every delinquent return for each missing year?
- How does the IRS identify non-filers?
- How important is it to the government that I didn’t file?
- Delinquent tax return criminal prosecution likelihood
- Will I get a refund on a delinquent tax year?
- What happens after enforcement action has begun?
- Should I use an attorney, EA or a CPA to represent me when I re-enter the tax system?
- Why do people drop out of the tax system?
- What happens after the IRS identifies me as a non-filer?
- IRS has not previously filed substitute returns
- Tax attorney representation when re-entering tax system
- How will the government force me to file returns?
- What penalties can IRS impose on delinquent tax filings?
- What should I do to re-enter the tax system?
- Can Law Office of David W. Klasing help me re-enter system?
- Will tax collection taken by authorities affect my credit
- I concealed bank accounts from the government
- Forgetting or failing to file tax return
