According to a Department of Justice press release, a Colorado businessman was recently sentenced to serve three months in a federal prison for willfully lying on his tax return, causing substantial tax loss to the government. This story should remind business owners across America that the IRS is keenly aware that taxpayers often attempt to blur the line between personal and business expenses. If you have failed to file a tax return for one or more years or have filed a return that does not properly reflect your true income or expenses, you should consider consulting with an experienced tax defense attorney as soon as possible to determine your best strategy for getting right with the government.
Court records reveal that Durango, Colorado resident Ryan Wilkinson was the owner and operator of a company that specialized in roofing. Between January 2015 and December 2017, Wilkerson failed to file federal income tax returns for both himself and his business. Instead, he commingled his business and personal funds to the point that the bookkeeper that Wilkerson hired indicated that he did not have sufficient information to properly and accurately prepare the books and records of the company.
Wilkerson used a company credit card to pay for his personal expenses. Additionally, the company paid for Wilkerson’s residential rental payments. When the company bookkeeper inquired about these expenses, Wilkerson directed him to classify the non-business expenditures as business related, despite the protests of the bookkeeper.
In addition to serving three months in federal prison, Wilkerson was sentenced to serve a year of home confinement, which will run concurrently with the three-year sentence of supervised release also imposed. Lastly, Wilkerson was ordered to pay restitution in the amount of $228,300, representing the tax loss that he caused.
The IRS is well aware of taxpayers’ efforts to blur the line between their business and personal affairs. Thus, when a taxpayer, like the defendant in the story above, uses business resources to pay for their personal expenses and subsequently fails to file a tax return, the IRS and Department of Justice ensure investigation and prosecution to the fullest extent of the law. Although the tax loss is relatively lenient as to what constitutes an “ordinary and necessary” business deduction under section 162, paying for blatantly personal expenses such as your primary residence or other unrelated investments are not ordinary and necessary, and will draw government scrutiny.
If you have failed to file a tax return for one or more tax years or have not sufficiently separated your personal finances with that of your business, it is in your best interest to contact an experienced dually licensed criminal tax defense attorney & CPA. Together, you will work to jointly understand the facts of your case, develop the best strategy to come into compliance, and complete any necessary filings to resolve your issue. Finally, one of the best benefits of being represented by a seasoned tax lawyer is never having to go up against the IRS alone.
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!
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
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