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Hawaiian Business owner Sentenced to Federal Prison for Tax Fraud

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Hawaiian Business owner Sentenced to Federal Prison for Tax Fraud

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Hawaiian Business owner Sentenced to Federal Prison for Tax Fraud

There are various perks of owning your own business. Many small to medium-sized business owners enjoy the ability to create their own schedule, determine their own pay, and personally reap the rewards of all of their hard work. That being said, being your own boss comes with very serious responsibilities, one of which is ensuring the business’s tax compliance. A Hawaiian businessman learned this the hard way as he was recently sentenced to spend a considerable amount of time in a federal prison. Individuals and small business owners alike should learn from his mistakes and seek the advice of an experienced tax attorney when structuring or preparing tax returns.

Albert Hee, 61, from Kailua, Hawaii, was sentenced in connection to a conviction for tax fraud. Hee, who was investigated by the IRS Criminal Investigation Division for violating tax laws between 2007 and 2012, was sentenced to serve a 46 month sentence in a high-security federal prison. News reports indicate that although Hee has a history of severe allergies that often requires medical attention, probation was not an appropriate punishment for his transgressions.

Court documents reveal that Hee filed false individual tax returns for six years, ending in 2012. The tax returns grossly underreported his income as he was receiving the benefit of a lavish lifestyle, paid for by his company, Waimana Enterprises, Inc., a Hawaiian entity involved in telecommunications. Much of the monies that should have been included in Hee’s gross income were falsely claimed as deductions by Waimana.

Hee was found to have directed the company to pay:

  • $96,000 for personal massages,
  • $1.6 million in salaries and certain benefits for his wife and children,
  • Over $700,000 in college tuition and expenses for his children, and
  • $1.3 million for a home in Santa Clara, CA that was used by his children while they attended Santa Clara University. Hee falsely claimed that the home was for employee use.

Hee’s circumstances are not unusual. Many small business owners attempt to take advantage of the sometimes generous deductions allowed by federal tax laws. In addition, business owners are typically not aware of the requirements to include benefits provided by a corporate not an owner or employee in gross income. When dealing with criminal tax charges, claiming ignorance of the law is not a defense. Taxpayers of all calibers are responsible for accurately reporting their income and deductions within the guidelines of federal tax law.

If you are a small or medium-sized business owner, it is in your best interest to contact an experienced tax attorney if you are planning on claiming large or unusual deductions based on business expenses that may not be allowable under the U.S. or state tax laws. Furthermore, if you have received notice of an audit by the IRS or state taxing officials, you should contact a tax attorney immediately. Taxing officials will use meetings with taxpayers as an opportunity to gather evidence that could eventually be used to procure a conviction.

Contact an Experienced Tax Attorney Today

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing business owners from the Southern California area in situations involving tax planning, structuring, and controversy with the IRS or state taxing authorities. One of the most common (and most devastating) mistakes that a business owner can make is believing that he or she can talk their way out of a tax investigation. When the IRS or local taxing authority comes knocking, be sure to answer with a team of highly-experienced tax professionals behind you, ready to zealously advocate for your best interests. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.