Taxpayers that get behind on their taxes commonly feel like they are at the bottom of a large financial hole. As time goes on, the hole gets deeper and deeper and it seems nearly impossible to climb out of it. Because many taxpayers feel that way, a common course of action is to ignore the problem. In other words, most taxpayers that are behind on their tax payments or tax return filings simply do not address the issue. The case that we are focusing on today provides an example as to why such inaction can make your problems exponentially worse, especially where the government commonly looks for prosecution targets to make an example out of this time of year – tax filing season.
Earlier this month, U.S. District Court Judge R. Brooke Jackson sentenced a local businessman to a year and a day in prison for failing to pay his taxes. According to a Department of Justice press release, Douglas A. Wieland, an owner of an asphalt company in the Denver area, failed to pay his taxes from 1999 through 2017. Prosecutors alleged that Wieland did not dispute that he owed the IRS for his taxes each year, he simply didn’t make his payments. When the IRS attempted to collect on Wieland’s severely overdue tax debt, he took steps to thwart their efforts.
Investigators discovered that Wieland utilized a warehouse bank account to pay for expenses, instead of using his personal bank account that the IRS was aware of. A warehouse bank is typically used in an effort to conceal the true owner of the account by commingling funds from several owners into the same account. Additionally, Wieland cashed checks from customers in a manner that did not alert to the IRS to his financial activity. At a court hearing, Wieland admitted that he wanted to prevent the IRS from “stealing” his money. By the way, the federal and state agencies are well within their rights to levy funds in your bank accounts if you ignore their efforts to collect.
The sentencing came after Wieland pleaded guilty to two counts of failing to pay his taxes in violation of 26 U.S.C. § 7203. In addition to Wieland’s federal imprisonment, he was ordered to pay more than $166,000 in restitution to the IRS and serve a period of supervised release.
As Mr. Wieland’s story clearly shows, the IRS and Department of Justice will eventually catch up to you if you have failed to pay your taxes. Although it is an easy trap to fall into, the longer that you wait to remedy your tax noncompliance, the more severe the outcome could be. Mr. Wieland will be spending over a year in prison likely wishing that he would have taken care of his overdue tax obligations earlier and in a different manner. It helps to remember that tax evasion criminal prosecutions come in two flavors, evasion of assessment and evasion of payment.
Contact an Experienced Tax Attorney
If you have not filed a tax return in several years or are behind on your tax payments, it is in your best interest to contact an experienced tax attorney today! A tax defense attorney who is also a CPA is uniquely positioned to help you get back into compliance with your tax obligations while considering the legal implications each step of the way. The important thing to remember is you do not want to compound your exposure for dropping out of the system, which is potentially prosecutable as a misdemeanor on its own and could result in one year in jail for each year you had taxable income and did not file, with getting nailed for felony income tax evasion (up to 5 years in jail per count) by cheating on the returns you eventually file. The government knows that you have a huge motivation to understate your tax liability on your way back into the system and therefore your risk of audit or criminal tax investigation is much higher than normal.
The IRS is under immense pressure to ramp up its collection efforts to pay for the recent tax reform expenditures and over 24 trillion-dollar deficit. This means that the IRS could be referring more cases of nonpayment or non-filing to the criminal investigation’s agents and on to the Department of Justice, income tax division for criminal prosecution. Taxpayers are almost always better off coming into compliance before the IRS or federal law enforcement authorities force you into tax compliance. Let us bring you back into tax compliance with your scalp still intact!
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have decades of experience representing taxpayers from a wide variety of backgrounds who are facing a myriad of civil and criminal tax issues. Whether you are facing a standard or reverse egg-shell audit or are a small business owner that has been notified that the IRS or state taxing authorities will be examining your business tax returns, our team of zealous advocates can assist in the development of a strategy with your physical and financial freedom as its top priority. Do not let the threat of a criminal tax prosecution or excessive tax, penalties and interest keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation. We can help you with all facets of coming into compliance from assessment through collection including the possibility of Tax Motivated Bankruptcy or an Offer in Compromise to get a fresh financial start.
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