A California home-based businessman recently learned that concealing millions of dollars of income and lying while under IRS audit can land you in extremely hot water. Whenever a taxpayer receives a notice that their tax return is under examination or if a taxpayer is being investigated for a tax-related issue, their first call should be to an experienced tax defense attorney.
According to a Department of Justice press release, Jyh-Chau “Henry” Horng owned a portion of a home-based scrap metal business. Horng’s primary focus was selling materials to China, which has been experiencing unprecedented growth in the past several decades. Horng filed annual tax returns between 1999 and 2008 that indicated that he and his wife earned only a modest sum from their international business and from other sources.
Upon IRS examination in 2009, Horng doubled-down on his deceit by telling revenue agents, and later IRS Criminal Investigation agents, that he had included all of his income on his tax returns and that he and his wife did not have any offshore bank accounts that would be subject to Foreign Bank Account Reporting (FBAR) laws.
In actuality, Horng earned millions of dollars that were not reported on his federal tax returns. Horng and his wife used the funds to invest over $5 million in a Northern California shopping mall, purchasing a Bentley luxury automobile, and buying luxury homes in New York City and San Francisco. After the audit in 2009 and until criminal tax charges were filed, Horng failed to file a tax return. He and his wife also did have reportable bank accounts located outside of the United States.
Horng was sentenced to serve 36 months in a federal prison. After he is released, he will serve three years of supervised release. Finally, Horng was ordered to repay a portion of the taxes that he previously failed to pay in the form of $1.1 million in restitution.
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See our Foreign Audit Q and A Library
This story is illustrative of the importance of consulting with an experienced tax defense attorney prior to any meeting with the IRS. Taxpayers make mistakes on their tax returns. But an even bigger mistake is thinking that you can go up against the IRS without representation. Like the defendant in the above case discovered, making false statements to the IRS in an effort to cover up prior wrongdoing can result in even harsher penalties.
A tax defense lawyer will work with you starting at the first notice of examination and see your case through until the end. A tax attorney possesses not only a valuable background in technical tax matters, but also has extensive insight and experience in the areas of criminal defense and procedure.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.
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