With the polarization of American politics at an all-time high, many may believe that our representatives in Washington do not play by the rules (or at least the same set of rules that they expect the general citizenry to follow). While the above may be true most of the time, this story details the story of a former government official that was investigated, prosecuted, and imprisoned for failing to file his taxes.
According to a Department of Justice press release, Melvin Reynolds, 66, was sentenced to serve six months in a federal prison for failing to file tax returns for tax years 2009 through 2012. Reynolds, who was sentenced in Chicago, Illinois, is a former member of the House of Representatives. At a bench trial where Reynolds represented himself, prosecutors provided evidence to show that Reynolds had an obligation to file federal income tax returns and that he willfully failed to do so. The income in question was from consulting that Reynolds performed while he was in Africa, to the tune of more than $500,000.
Reynolds unsuccessfully argued that his “compensation” was actually reimbursement for expenses that he had incurred, and therefore should not be includible in his gross income. Prosecutors showed that the money he received was spent on tickets to sporting events, clothing, and restaurants in Chicago. The presiding federal judge sided with the government. Interestingly enough, during his tenure in Congress, Reynolds served on the Ways and Means committee, the House of Representatives committee that deals with tax-related matters.
As you can see from the story above, the IRS and the Department of Justice are willing to go after anyone for failing to file and/or pay their taxes. For those taxpayers that are out of compliance in the filing of their federal or state income taxes, time is of the essence. As non-filing makes up approximately 20 percent of the tax-gap at the federal level, the IRS and Department of Justice have made identifying and going after taxpayers that have not filed or paid their taxes a top priority.
When preparing tax returns for missed years, proper care should be given to ensure their accuracy as your risk of subsequent audit is extremely heightened and you do not want to compound your exposure by getting caught cheating on the way back into the system. Because of this increased risk, an experienced tax attorney should be consulted at the outset of efforts to come into tax compliance. Our firm has never had a non-filer that we brought back into the system criminally prosecuted.
While the simple act of non-filing a tax return where legally requires to is ordinarily charged as a misdemeanor, if any of the badges of fraud delineated in Spies versus the US are evident, felony Spies Evasion charges can be brought by the Department of Justice.
Contact an Experienced Tax Attorney
An experienced tax defense attorney will assist in every step of your effort to get current on your tax filings. From gathering information, to preparing and filing the return, a seasoned tax lawyer will ensure that your filing positions and method of coming into compliance will result in the least risk to you, based on the facts and circumstances of the situation. If one or more of your returns are selected for audit, a tax attorney will represent you in every interaction with the government to ensure, among other things, that you do not provide information or documents that may be used against you at a later time or make inadvertent criminal tax admissions.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have assisted clients from all walks of life in a myriad of tax situations. Our team of advocates will zealously advocate on your behalf by creating and implementing a sound tax strategy tailored to your individual needs. Do not let fears about the IRS or state taxing authorities keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate initial consultation.
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Here is a link to our practice overview video on warning signs than an audit has gone criminal.