According to a Department of Justice press release, a Chicago-area tax preparer has become the target of government efforts after allegedly helping a multitude of taxpayers file fraudulent tax returns. Considering that tax season is in full swing, it is critical to understand the severe consequences that could arise if you are caught cheating on your taxes because it’s not just your tax preparer that can go to jail. If you have failed to file your individual or business tax return for one or more years, or have taken a position on a tax return with respect to items of income, deduction, or credits, that would not hold up under the scrutiny of an IRS or state tax audi, examination or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney as soon as possible to discuss your options to come into compliance.
Tax Preparer Allegedly Fraudulently Inflated Business Losses and Educational Credits
Court records reveal that Gretchen Alvarez, aka Gretchen Trejo owns and operates her tax preparation business under the name Sick Credit Repair Tax and Legal Services. The IRS and Department of Justice allege that Alvarez assisted a multitude of taxpayers to lower their tax liabilities artificially and illegally. The action filed in federal court is not a criminal charge, but rather an attempt to have a federal court order her to stop aiding clients file tax returns.
The Department of Justice and the IRS have uncovered evidence that suggests that Alvarez lowers her clients’ tax liabilities by creating fictitious business losses, arising from “side businesses” that do not exist. These losses are used to fraudulently offset income that would have been otherwise subject to taxation. Additionally, federal authorities believe that Alvarez’s preparation methods include claiming that taxpayers attended educational institutions that they have never attended to fraudulently procure tax credits related to higher education costs.
The IRS and Department of Justice have admitted that they do not have a clear picture of the extent of Alvarez’s fraudulent preparation business because she allegedly fails to identify herself as a paid preparer on the face of the tax return or use an IRS-issued tax preparer identification number. Again, this effort by the Department of Justice and the IRS is not criminal in nature, yet. As additional evidence is gathered, criminal charges could (and likely will) be filed.
Coming into Tax Compliance Before It Is Too Late
Many Americans believe that small lies on their tax return will go undetected and that their wrongdoing does not truly hurt anyone. Although it is true that a single taxpayer’s misdeed will likely not cause the U.S. tax system to crumble, when millions of like-minded taxpayers attempt to employ the same tactics, the tax base is eroded quickly. To combat this, the IRS has employed the use of advanced data analytics tools to try to automate the detection of noncompliance that includes potential tax crimes. Additionally, the IRS has ramped up hiring of agents who can run audits and readily discover tax fraud.
If you have failed to live up to your obligations under the U.S. tax law, either by failing to file a timely U.S. tax return on an annual basis or by being untruthful about your true earned income, deductions, or credits, you should contact an experienced tax defense attorney as soon as possible to determine your options to come into compliance. With the help of a seasoned tax lawyer, you will establish the pertinent facts of your case and work together to identify an agreeable strategy to address your tax exposures, all the while keeping your physical and financial freedoms top of mind. While you are represented by a tax defense lawyer, you will never have 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!
We Are Here for You
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.
In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
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Questions and Answers on Unfiled Back Taxes
- What are the common issues that non-filers face?
- Risk of audit after filing delinquent prior year returns
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- How important is it to the government that I didn’t file?
- Delinquent tax return criminal prosecution likelihood
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- What happens after enforcement action has begun?
- Should I use an attorney, EA or a CPA to represent me when I re-enter the tax system?
- Why do people drop out of the tax system?
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- IRS has not previously filed substitute returns
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Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
- Guilty of tax obstruction by backdating documents?
- To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
- Help! The Document I Gave the IRS Had False Information
- Tax crime aiding or assisting false return IRC §7206(2)
- What is the crime known as tax obstruction § 7212?
- What is the difference between tax perjury and tax evasion?
- What is the tax crime commonly known as tax perjury?
- What is a Klein Conspiracy?
- Increased possibility of civil action in IRS investigation
- Am I Guilty of Tax Evasion if the Law is Vague?
- What happens if the IRS thinks I committed tax crimes?
- What are ways to defend against a tax evasion charge?
- Difference between criminal tax evasion and civil tax fraud
- What accounting method does the IRS use for tax fraud
- Can I Change Accounting Method to the Accrual Method
- What is the willfulness requirement for tax evasion?
- I didn’t know I committed tax fraud. Can I get off?
- Concealed assets from IRS. Can I avoid tax evasion charges
- How government proves I willfully engaged in tax evasion
- What is the venue or court where a tax crime case is heard?
- Must the IRS prove tax crimes beyond a reasonable doubt?
- Is it a crime to make false statements to the IRS?
- Will the IRS overlook my tax evasion if it’s minor?
- Failed to tell IRS about my nominee account
- Audit risk with cash based business transactions
- How to defend a client charged with tax evasion
- Is it tax evasion if I didn’t file income tax return?
- Government says I attempted to evade my taxes. Now what?
- I forgot to pay my taxes or estimated tax. Is this a crime?
- Government proof I “willfully” failed to pay taxes
- 5 Ways to Respond to Tax Evasion Charges
- Being audited after using a tax professional
- Rules for what an IRS agent can do while investigating me
- How tax preparers, attorneys and accountants are punished
- How the IRS selects tax crime lead for investigation
- How does the IRS prosecute suspected tax crimes?
- Does IRS reward informant leads for suspected tax crimes?
- How the government proves deficiency in a tax evasion case
- Do prior tax crimes factor into new IRS tax convictions?
- Requesting conference before investigative report is done
- Requesting conference after IRS Special Agent Report
- What are my rights during an IRS criminal investigation?
- Avoid prosecution for tax crime with voluntary disclosure?
- Defense tactics that make it hard for to prove willfulness
- How a tax attorney can stop your criminal tax case?
- What can you generally tell me about tax crimes?
- Continuing filing requirement with investigation pending
- Federal criminal code crimes that apply to tax issues
- Penalty for making, subscribing, and filing a false return
- CID special agent’s report for criminal prosecution
- What is the discovery process in a criminal tax case?
- What the IRS includes in indictment for tax case
- What is the hardest element of a tax crime to prove?
- IRS methods of gathering evidence to prove tax crime
- What does a grand jury do in IRS tax crime prosecution?
- Failure to keep records or supply information
- Failure to make a return, supply information, or pay tax
- What is attempting to evade payment of taxes?
- What is income tax evasion and how is it punished?
- What is attempted income tax evasion?
- What is the crime of failure to pay tax? What is punishment
- Crime of making or subscribing false return or document
- Criminal Investigation Division investigation tactics
- Tax crimes related to employment tax forms and trust funds
- Tactics to defend or mitigate IRS criminal tax charges
- How the IRS generates leads about suspected tax crimes
- What is the crime ”evasion of assessment” of tax?
- Specific examples of “attempting” to evade tax assessment
- What is the so-called Spies evasion doctrine?
- Does overstating deductions constitute tax evasion?
- Is it tax evasion if my W-4 contains false statements?
- IRC §7201 attempt to evade vs. common-law crime of attempt
- What are the penalties for Spies tax evasion?
- How government proves a taxpayer attempted tax fraud
- What is a tax that was “due and owing.”
- What is evasion of assessment for tax liability?
- Is evasion of assessment different from evasion of payment
- Does the IRS have a dollar threshold for tax fraud?
- What is the IRS burden of proof for tax fraud convictions?
- Are Tax Laws Constitutional?
- What is the source of law that defines tax evasion?
- Does section 7201 create two distinct criminal offenses?
- Does tax evasion definition include partnership LLC
- What if I helped someone else evade taxes?
- Is it illegal to overstate deductions on my tax return?
- Is it illegal to conceal bank accounts from the IRS?
- Do later losses justify prior deductions?
- Common reasons the IRS and DOJ start investigations
- What is the Mens Rea component of tax crimes?
- What is a proffer agreement and what are the risks?
- Why to have an attorney to review a proffer agreement
- Why enter into a proffer agreement?
- Limited use immunity from proffer agreements
- Difference between civil and criminal fraud allegations
