If we are being completely honest, we can confidently say that no one enjoys paying taxes. We pay taxes because we are required to contribute to a certain portion of our earnings toward the cost of keeping our society going. It is pretty well established that if we fail to pay our taxes, very bad things can result. But what if your defense to failing to pay taxes was an assertion that you, in fact, didn’t own any of the money that you were purported to have earned, but instead, a higher power owned all of your wealth? As you will read below, U.S. residents are still required to pay their tax, regardless of who you claim is the eventual owner of your earned income. Furthermore, this story will demonstrate the seriousness of being charged with tax fraud and the importance of consulting with an experienced tax attorney as soon as you find yourself fin trouble with the IRS or state taxing authority.

According to local news reports, Iowa residents Ted Nelson and his son, Steven Nelson were sentenced to serve lengthy sentences in federal prison, last week. Among the federal charges that they were sentenced on were conspiracy to defraud the federal government, impeding the Internal Revenue Service, and failure to file a tax return. Steven Nelson was sentenced to serve just over a day in prison, while his father, Ted Nelson found out that he would be spending the next five years in a federal penitentiary and will spend the following three years in a supervised release program. The federal court also ordered the two to be jointly and severally liable for restitution in the amount of over $1.8 million.

The federal court found that the father-son duo established nearly 40 entities in order to avoid paying federal income tax. The entities ranged from trusts, to corporations, to limited liability companies and were all used to hide money from the IRS. When Ted Nelson found out that the IRS was investigating the potential tax fraud, he took the position that he was not obligated to pay tax because he belonged to the Pembina Nation Little Shell Band of North America and was not subject to the laws (including tax laws) of the United States. Steven Nelson may have used his better judgement when he chose to not utilize the sovereignty defense, because although his motion to sever his case from his father’s, he did receive significantly less time in prison.

Although claiming that you are a sovereign citizen or that you are not the true owner of your money because of your religion likely won’t be a very effective defense in a criminal tax fraud prosecution, a criminal tax defense attorney will be your most vital resource if you have to square off against Uncle Sam. Many taxpayers choose to represent themselves, at least at the early stages of a tax controversy with the mindset that “if things get serious, I’ll talk to a lawyer”. But what many of those who find themselves in tax trouble don’t realize is: the absence of a tax attorney at the onset of a tax examination or investigation can lead to a plethora of problems down the line, including a potential prison sentence. Only a tax attorney has valuable legal training that includes criminal defense, criminal tax procedure, and Constitutional Law. With that knowledge base, an experienced criminal tax lawyer can protect you from saying something that you shouldn’t or stop you from turning over documents that the law doesn’t require you to. The difference between an experienced tax attorney and representing yourself could be a long stint in a federal prison.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have experience representing taxpayers from all walks of life. Whether you are facing an IRS or a state income tax audit or your business is being scrutinized for its federal or state tax obligations, our team of zealous advocates is ready to fight for your physical freedom and financial well-being. Going up against the tax authorities on your own can be extremely risky and lead to life-changing negative consequences. Don’t let tax troubles make you lose sleep at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation. Visit our YouTube channel for helpful videos and information about the services that we provide.