A Florida business owner was sentenced to serve more than a year in prison last week. Federal authorities investigated and charged three men for conspiring to avoid paying excise taxes on the importation of automobile tires. This crackdown is yet another example of the government tightening the leash on small and medium-sized businesses. If you are a business owner or taxpayer that isn’t in compliance with their tax obligations, this story is a must-read.
Under the current federal law, there is an excise tax on tires that are marked for highway use. The federal tire excise tax is collected by the importer but can be refunded if the tires are later exported for sales outside of the United States. Importers typically pass excise taxes on to retailers, which is typically passed on to customers.
Nestor Bastidas, 53, of Coral Springs, Florida owned and operated The Fat Tires, Co. (Fat Tires), a Florida tire retailer. According to a Department of Justice press release, Bastidas purchased tires that were subject to the federal excise tax on behalf of Fat Tires from tire importer Banlu Tires, Inc. Banlu was owned by co-conspirator Angel Gomez. Upon importation, Gomez should have paid federal excise tax on the tires, which were marked for highway use, and passed the cost along to Bastidas.
To give the appearances that the tires in question were on-sold to foreign buyers, Bastidas purchased fraudulent bills of lading from International Trade-Logistics Services, Inc., a logistics company owned by Luis Gomez, yet another co-conspirator. The falsified bills of lading incorrectly showed that the tires were on-sold by Fat Tires to customers in the Dominican Republic and other countries. Federal authorities contended that Bastidas, Angel Gomez, and Luis Gomez all knew that the tires would not be sold to customers in a foreign country and the bills of lading were only being used to provide fraudulent proof that the federal excise tax on the tires needn’t be collected or paid on to the government.
All three men pleaded guilty to conspiracy to defraud the United States. In addition to Bastidas’ prison term, he will serve three years of supervised release and was ordered to pay restitution. Angel and Luis Gomez will be sentenced in separate hearings later this year and are expected to receive similar sentences.
Although there are not many businesses that have to worry about paying excise tax on the importation of tires marked for highway use, there are several other excise taxes that businesses must consider. Furthermore, the current political climate and resulting tariffs and other tax law changes require business owners to ensure that they are on top of their federal, state, and local tax compliance obligations.
An experienced tax attorney that has years of experience assisting businesses will be able to answer any questions about areas of tax compliance that your business is not completely certain about. Further, if you or your business have been less than completely compliant with regard to tax obligations in the past, our team can assist you in developing a strategy to come into compliance while minimizing the negative consequences.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing business owners in a myriad of tax and business-related matters, including taxes related to specific businesses, such as excise tax. Our team is ready to zealously advocate for you and your business. Do not let the threat of an IRS or state tax investigation keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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