According to a Department of Justice press release, a paid male escort recently pleaded guilty to filing false tax returns after he drastically underreported income for multiple years. This story should remind taxpayers, whether those who operate through a corporation or simply earn wage income and report their income on an individual tax return, that the underreporting of income can have severe civil and criminal tax consequences. If you have failed to file a tax return for one or more years or have underreported your income in a tax filing, it is vitally important that you connect with an experienced tax defense attorney to determine your strategy to get right with the government.
Court records reveal that Jami Kopacz was a paid male escort who served clients across the United States. IRS investigators determined that between 2015 and 2018, Kopacz directed clients to pay him through his S corporation, JK Training LLC. Though, when Kopacz filed his annual Forms 1120-S, he substantially understated the income that he earned. Because his business entity flowed through to his individual tax returns, he implicitly also understated income on his annual Form 1040. The IRS estimates that the tax loss caused by Kopacz totals more than $278,000.
Kopacz will be sentenced early next year. He faces up to three years in federal prison. Additionally, Kopacz may be sentenced to serve up to three additional years of supervised release. Finally, he will likely be ordered to pay restitution to the IRS, representing the tax loss that he caused the government.
This case is a reminder that the underreporting of any type of income, be it wage income or income earned through a business, can give rise to severe civil and criminal tax consequences. Because the defendant above underreported his business income, both his corporate and individual tax returns were false. Because of that misstatement, the defendant may be spending the next 36 months in a federal penitentiary.
If you have failed to file a tax return for one or more years or have underreported income (or overstated deductions) on your corporate or individual tax return(s), it is in your best interest to discuss your case with an experienced tax attorney. Your tax lawyer will ascertain the pertinent facts of your case and work with you to determine the best strategy to get right with the government. Additionally, one of the best perks of being represented by a tax lawyer is not having 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 disclosure before 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, Kovel CPAs 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!
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.
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