In March 2019, the U.S. Department of Justice issued a press release announcing the guilty plea of 76-year-old defendant Anthony Valentino, “a real estate investor who owns property in Connecticut and New York,” to charges of felony tax evasion. Appearing before U.S. District Judge Kari A. Dooley at the federal courthouse in Bridgeport, Connecticut, Valentino admitted to one count of tax fraud after concealing income from the IRS by willfully omitting more than $1 million from personal and partnership tax returns. In July 2019, Valentino was sentenced to serve nine months in federal prison, with his sentence scheduled to begin this October.
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CT Investor Fails to Report Over $1M, Sentenced for Felony Tax Evasion
According to the DOJ press release linked above, “Valentino deposited more than $1.1 million of rental real estate receipts… into his personal bank accounts” during the tax period from 2011 to 2013, yet willfully “failed to report the receipts on his personal and partnership federal tax returns.” On tax returns filed during this period, Valentino reported income of approximately $42,000, well short of his actual earnings. By concealing more than $1 million of taxable income from the IRS during the period noted – a total of $1,008,125, to be precise – Valentino deliberately avoided the payment of approximately $302,449, resulting in a substantial tax loss.
Valentino, who was sentenced to nine months in prison, is expected to report in October 2019. In addition, Valentino has been ordered to pay more than $300,000 in restitution, in addition to another $333,000 in assorted IRS penalties and interest charges.
Tax evasion, the offense to which Valentino pleaded guilty, is among the most harshly punished of tax offenses, with a maximum prison sentence of five years (compared to a maximum of three years for making and subscribing false returns, or one year for failure to file returns or pay taxes). The federal tax evasion statute, 26 U.S. Code § 7201, also allows sentencing judges to fine tax evaders up to $100,000, notwithstanding any additional IRS debts, penalties, or interest charges. Offenders can also be ordered to pay “the costs of prosecution,” as provided by statute.
Structuring Laws, Large Cash Transactions, and Criminal Tax Investigations
It is worth pointing out that, in addition to willfully failing to report income and thereby committing tax fraud, Valentino also engaged in another illegal, though lesser-known practice called “structuring.” As our income tax evasion attorneys explained in a previous article, structuring involves disguising or concealing large financial transactions or bank deposits, which, if they exceed a $10,000 threshold, must be reported to the IRS via Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business). This is also referred to as a “Currency Transaction Report” (CTR). CTRs are required under the Bank Secrecy Act (BSA), which is the same law responsible for FBAR filing requirements. (For more information about filing an FBAR, refer to our guide to FBAR.)
If you are a small business owner, you should discuss any recent large transactions with a business tax attorney to make sure that you have reported all payments and deposits correctly. This is an especially important measure for real estate professionals (as Valentino’s case demonstrates), dental practices, and cash-based businesses, which are frequently singled out for tax audits.
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IRS Tax Evasion Defense Attorneys for Small Business Owners in California
The willful failure to report taxable income – including foreign income – is a criminal offense. Even inadvertent failures can lead to expensive interest charges, tax penalties, and ultimately, a tax bill that may be much larger than you were anticipating.
If you have unreported U.S. or offshore income, you should discuss your situation confidentially with an experienced and award-winning tax attorney, like the California, federal, and international tax lawyers at the Tax Law Office of David W. Klasing. Some paths to tax compliance are more dangerous than others, making it prudent to weigh your options with a knowledgeable tax professional. Depending on your situation, it may be appropriate to make a voluntary disclosure. To arrange a reduced-rate consultation with a tax evasion defense lawyer, contact the Tax Law Office of David W. Klasing online, or call (800) 681-1295 today.
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