Individual businesses must fulfill all of their tax obligations. That obligation doesn’t just include filing and paying taxes; it also includes the accurate reporting of all income, timely filings, disclosure of certain foreign accounts, and proper treatment of payroll taxes. There are a variety of reasons why businesses owners may fail to file, pay or fulfill some aspect of their tax obligation. In some instances a difficult business environment or a business reversal may motivate a business owner to play with fire and attempt to balance his or her books by concealing taxable income or failing to pay taxes. In other circumstances, a lack of familiarity with the U.S. Tax Code can result in serious tax mistakes that can imperil the continued viability of the business.
In any case, the following will illustrate the harsh consequences faced by business owners who do not maintain full compliance with their tax obligations. If you have questions or concerns regarding your business’ tax compliance, seek an experienced Tax Attorney immediately. Taxpayer who voluntarily disclose past problems undertake remedial measures can often resolve a tax mistakes without facing criminal tax charges. However, if your willful failure to file or concealment of income is discovered by the IRS, the odds of a tax enforcement action being launched against you is extremely high.
Man convicted on tax fraud charges due to fraudulent tax filings for his and his wife’s business
John Fall, a Rhode Island-based real estate agent, bought and sold properties to make a living. Fall was also responsible for overseeing the financials and taxes of his wife’s company. The DoJ stated that rather than filing under the true identity of the business’ owners or principals, Mr. Fall used a number of nominee entities to conceal business transactions. Nominee entities are a person or entity that is only given limited authority for a usually limited amount of time – often at formation – to act on behalf of the business. The true responsible party remains the member, sole proprietor, partner or owner. The IRS has stated that it will pursue enforcement actions against those who misuse the nominee filing to obtain an employer identification number (EIN). Depending on the perceptions of the IRS agent, acts of this type can be considered willful if they involve a voluntary or intentional violation of a known legal duty. Willful violations of the tax code result in significantly more severe punishments.
Mr. Fall also had problems with filing taxes in some years and providing accurate tax information in many other years. DoJ said Fall filed false taxes for the 1998 and 1999 tax years. From 2000 to 2010, he did not file taxes at all. An IRS audit of Mr. Fall’s tax records for just 1998 through 2000 found that, then, he owed more than $70,000 in unpaid back taxes.
Mr. Fall was convicted by a federal jury on one count of tax evasion, one count of corrupt interference in the administration of the tax laws, and two counts of aiding and assisting the preparation and filing of untrue corporate tax returns. He now faces a federal prison sentence of 30 months followed by a 3 year supervised release period.
Pizza franchise owner and others snared in conspiracy to defraud the IRS
The owner and face of Happy’s Pizza, Happy Asker, and three others have been convicted or pleaded guilty to a bevy of charges related to the failure to file accurate tax returns, the failure to hold and pay over payroll taxes, and the obstruction of the IRS’s administration of the U.S. Tax Code. From this scheme Mr. Asker was convicted of a number of tax crimes including:
- Conspiracy to defraud the government – For the conspiracy charges, Mr. Asker faces a prison sentence of no more than 5 years and a $250,000 penalty.
- Filing a false income tax return and aiding or assisting in filing a false return – Each of these charges can be punished with up to a 3 year prison sentence and a fine of $250,000. These penalties can be imposed for each count.
- Obstructing and impeding the administration of the tax code – Obstruction with the administration of the tax code can be punished by up to 3 years in prison and a fine of no more than $250,00.
In all, Mr. Asker was convicted on 32 counts of tax crimes. While the scheme may have temporarily netted Mr. Asker and his co-conspirators millions in ill-gotten gains, those benefits were shot-lived. Now, Mr. Asker and his associates face years to decades behind bars and hundreds of thousands of dollars to millions in fines and restitution.
Tax concerns?
Tax issues can lead to extremely harsh consequences including not only harsh financial consequences that can lead to the loss of the business, but also the loss of one’s freedom and liberty. To speak to an experienced Tax Attorney, call the Tax Law Offices of David W. Klasing. We can work with you to help you resolve your tax issues. Call (800) 681-1295 today to schedule a reduced-rate tax consultation or contact us online.
