If you follow tax news, you are likely aware that lengthy prison sentences are typical in criminal tax cases – for example, that of Newington, CT-based insurance salesman Terry DiMartino, who was recently sentenced to 70 months in federal prison for tax fraud. The Department of Justice (DOJ) noted that DiMartino, who was sentenced in June 2018 following a March 2016 conviction, had “not filed an accurate individual income tax return since the 1996 tax year.” Thus, this story serves as more than just a cautionary tale about the importance of compliance. It is also a reminder that the Internal Revenue Service (IRS) can dig years, or potentially even decades into a taxpayer’s history, depending on why he or she is under investigation. If you need assistance getting caught up on tax filings, our experienced tax preparers can help – and potentially, prevent you from finding yourself in a similar situation.
According to a DOJ press release, DiMartino was originally convicted in March 2016. Over two years later, he has finally been sentenced – and the court was not lenient. Not only was DiMartino ordered to serve 70 months in prison – a sentence which works out to just under six years of incarceration – but additionally, was ordered to pay the IRS restitution in the amount of approximately $658,548. Moreover, he will be required to serve one year of supervised release, which is similar to parole, upon release from federal prison.
These penalties resulted from a string of serious tax offenses, some of which were executed years in the past. Specifically, DiMartino was convicted of the following eight crimes:
These charges arose from an ongoing series of tax violations. According to court records, prosecutors accused DiMartino not only of sending the IRS “three false tax returns for the 2007 tax year, one of which requested a fraudulent $14 million refund,” but additionally, engaging in “threatening correspondence” with the IRS (and various insurance companies) after taxes were assessed against him and the IRS attempted to collect the tax debts. Not only was this correspondence “threatening” in nature; the press release noted it was also “false.”
One of the most salient points in the press release is the statement that “DiMartino has not filed an accurate individual income tax return since the 1996 tax year” – more than two decades ago. This statement likely surprised at least a few readers, given the widely-held misconception that there is a three-year statute of limitations, or deadline for the IRS to investigate, following the submission of a tax return. Though the three-year time limit applies under typical circumstances, there are several exceptions where the statute can be lengthened to six years, or even removed from the equation entirely, effectively giving the IRS absolute freedom to delve into the taxpayer’s financial history. For a detailed explanation of when three-year, six-year, and limitless statutes of limitations apply, see our previous article discussing how many years the IRS can audit taxes.
Failing to file a tax return, falsely claiming a tax refund, filing a false return, and interfering with the IRS are all extremely dangerous actions for the taxpayer. Even accidentally failing to file a return can lead to stiff civil penalties (while allowing costly interest to accumulate), while deliberate acts of fraud are virtually guaranteed to trigger devastating fines, restitution orders, and potentially, prison time.
If you forgot to file a tax return this year or in previous years, the time to take corrective action is now. For a reduced-rate consultation concerning tax evasion charges, unfiled returns, or related tax issues, call our criminal tax defense attorneys at (800) 681-1295, or contact the Tax Law Office of David W. Klasing online.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
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