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Florida Business Owner Pleads Guilty to Tax Evasion, Faces Federal Prison

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    According to a Department of Justice press release, a Florida business owner recently pleaded guilty to tax evasion after treating his personal gambling costs as business expenses. This story should serve as a reminder to taxpayers that commingling personal and business expenses can sometimes be tempting, but any potential benefit is generally outweighed by the repercussions of an audit, , eggshell audit, reverse egg shell audit, criminal tax investigation, and criminal tax prosecution. If you have filed a business tax return that has overreported deductions for expenses that are not related to your business over have otherwise unlawfully decreased your tax liability, it is in your best interest to contact an experienced tax defense attorney to determine your level of exposure and to take the necessary steps to come into tax compliance without facing criminal tax prosecution even where you original actions were patently illegal as long as you are willing to knock on the government’s door before they arrive at yours.

    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!

    Defendant Classified Gambling Expenses as Cost of Goods Sold, Convicted of Tax Evasion

    Court documents reveal that Alejandro Gomez, of Broward County, Florida, was the owner and operator of Fleishmann’s Produce, an importer of fresh herbs. In 2014 and 2015, Gomez personally incurred gambling costs of $896,951 and $1,051,213, respectively. Although gambling expenses are generally only deductible to the extent of gambling winnings, Gomez instead reclassified his gambling expenditures as cost of goods sold, thereby effectively reducing his taxable income. As his company’s true income was false, Gomez’s personal income tax returns failed to reflect the true amount of income that he earned. The IRS and Department of Justice estimate that Gomez’s actions caused a tax loss of more than $545,000.

    Gomez will be sentenced later this fall. He faces up to five years in federal prison. Additionally, Gomez may be sentenced to a term of supervised release for up to three years to commence upon the completion of his physical incarceration. Lastly, Gomez will likely be ordered to pay restitution to the IRS, representing the tax loss that he caused, interest, and penalties.

    Identifying Personal vs. Business Expenses and Navigating Common Traps

    Business owners are all too familiar with the temptation to commingle their personal and business-related expenses. As the defendant in the above story came to find out, the benefits associated with claiming personal expenses as business expenses for tax purposes can result in life-changing civil and criminal penalties. This is not to say that certain expenses incurred by the business that provide some level of benefit to its owners are always non-deductible. Rather, the key takeaway is that an experienced dually licensed Business Tax Attorney & CPA is a key resource in determining the tax treatment of certain business expenses and can offer a variety of valuable planning techniques that comply with federal and state tax laws.

    If you own a business and have deducted certain expenses that could draw scrutiny from the IRS or state taxing authorities, or are in need of guidance as to what deductions are available for certain business expenses, you should contact an experienced business tax attorney. Together, you will work to identify areas of exposure and jointly agree on a path to come into tax compliance. With the IRS hiring a wave of new agents who will focus on examinations and investigations, there is no time like the present to get right with the government.

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