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Connecticut Gambler and Business Owner Sentenced to 14 Months in Prison for Tax Evasion

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    A recent Department of Justice press release revealed that a Connecticut professional poker player and business owner was recently sentenced to serve 14 months in federal prison after having been convicted of tax evasion last year. If you have under-reported income, over-reported deductions, or have failed to file a tax return altogether, it is in your best interest to consult with an experienced tax defense attorney to determine the best strategy to come into compliance before you are audited or criminally investigated by the IRS.

    Defendant Sentenced After Failing to Report Large Amounts of Income

    According to court records, Guy Smith, owned and operated Centerline Interiors LLC and spent a considerable amount of time playing poker professionally. Between 2012 and 2016, Smith was convicted of evading taxes by using pre-tax business funds from Centerline to fund his professional gambling endeavors. Additionally, the gambling winnings earned by Smith went untaxed as they were not reported on his individual income tax returns for the relevant years.

    Federal investigators discovered that Smith picked and chose which information that he would provide to his tax preparer. For instance, he provided Centerline’s income and expenses, but failed to provide any bank statements, which would have shown that Smith received $1.1 million in income from the business. Additionally, he did not provide information related to his gambling winnings to his taxpayer, despite being instructed to do so by the IRS on multiple occasions. In total, the IRS estimated that the total tax loss caused by Smith exceeded $820,000.

    In addition to a 14-month federal prison sentence, Smith was ordered to serve an additional two years of supervised release, which will commence upon the completion of his physical incarceration. Lastly, Smith was ordered to pay $821,415 in restitution, representing the amount of tax loss caused.

    Coming into Tax Compliance After You’ve Fallen Behind

    As we approach the deadline for the filing of 2020 individual tax returns, it is important to understand the potential repercussions faced by taxpayers who intentionally evade taxes or provide false or incomplete information to their tax preparer. As the defendant in the above story is now well-aware, lying on your taxes can result in life changing penalties.

    If you have failed to file a tax return for one or more years, or have knowingly falsified your tax return, you should work with a seasoned tax lawyer to determine the necessary steps to bring you into compliance. You should discuss any tax position you have taken that you could not support if it were questioned by the a State Taxing Authority or the IRS in an audit, eggshell audit, reverse egg shell audit or criminal tax investigation. While you are being represented by a tax defense attorney, you will not have to interact with the IRS or State Tax Authority alone. After you have agreed on a strategy, your tax lawyer will work with you to execute your plan and represent you in any interactions with the IRS or State Tax Authority while your matter is being resolved.

    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!

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