According to a Department of Justice press release, Lawrence Martin Birk, of Colorado, was sentenced to serve five years in federal prison for tax evasion. Although Birk’s defiance to pay tax may come across as more blatant than most who are investigated for tax-related crimes, the takeaway is the same: if you have not filed your tax returns or paid the taxes associated with them, the IRS will eventually detect the omission and pursue an examination, a tax investigation, and potentially criminal tax charges. If you have not been complying with state or federal tax laws, it is in your best interest to contact an experienced tax defense attorney as soon as possible.
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According to court documents, Birk was the owner and operator of Tarryall River Log Homes since 2000. Birk’s company was profitable and in nearly any other scenario, would pay taxes on its profit. Prosecutors alleged that Birk aligned himself with certain tax protestor organizations, who believe that its members are not obligated to pay U.S. Federal tax.
Since the company’s inception, Birk failed to pay federal income tax on Tarryall River Log Homes income, nor did he pay individual income tax. Upon learning of Birk’s nonpayment, the IRS initiated collection efforts and even visited Birk at his home. Birk hired a tax firm to prepare several years of delinquent returns upon which he admitted to owing tax on his income over the years. Though, Birk’s delinquent tax returns failed to report over $400,000 of retirement income that he intentionally routed through a shell company.
Although Birk admitted to owing tax, he failed to pay the amount of tax due on the tax returns. Prosecutors alleged that Birk sent threatening letters to the IRS that cited non effective tax protestor arguments that he sourced from the tax protestor organizations to which he belonged.
When the IRS collection efforts escalated to the seizure of the funds in Birk’s bank account, he intentionally thwarted collection efforts by purchasing cashier’s checks to reduce the balance in his accounts. The IRS and Department of Justice estimate that his outstanding tax debt through 2005 are over $2 million. Additionally, Birk did not file tax returns (or make any payments of tax) for income earned from 2006 through 2018. In total, the government estimates that his tax debt is over $3.5 million.
In addition to his sentence of federal imprisonment, Birk was sentenced to serve three years of supervised release. Lastly, Birk was ordered to pay restitution of just under $1.9 million to the IRS, representing a portion of the tax debt he failed to pay.
The lesson from the story above is that no matter a taxpayer’s reasons for not filing or paying taxes owed, the IRS (and sometimes the Department of Justice, if needed) will catch on and bring down their tax compliance hammer, yielding potentially devastating criminal tax consequences. Although it is easy to ignore delinquent tax filings or past-due tax bills, the potential for additional financial penalties and sanctions and federal imprisonment are real and will likely be much worse than getting right with the government before that situation escalates.
If you are behind on your tax filings or have delinquent tax balances, it is in your best interest to contact an experienced tax defense attorney. Not only will your tax attorney work to understand your particular situation and develop solutions, they will be present during any interactions with the IRS. Too many taxpayers believe that they can get out of a sticky situation with the IRS on their own. In reality, IRS agents are trained to sniff out “badges of fraud” and typically see through taxpayers’ excuses or falsehoods.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing taxpayers from all walks of life. Whether you are a business owner facing a sales and use tax audit or you have received notice that your individual return is being examined, our team of zealous advocates are standing by to help you develop a sound legal strategy that will keep your personal and financial interests at the forefront of importance. Do not lose sleep over the possibility of tax evasion or other tax-related charges from the IRS or state taxing authorities. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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