Last week, the Department of Justice announced that a businessman of Salem, Massachusetts pled guilty in a federal court to several criminal counts related to fraudulent activities that were committed while working on behalf of a local business. This news reinforces the fact that an investigation into a crime unrelated to tax evasion can lead to criminal tax charges.
According to the Department of Justice press release, Steven Nguyen, 50, pled guilty to tax evasion, credit card fraud, as well as bank fraud on Tuesday, June 20th. The charges relate to Nguyen’s illegal behavior while in his position as a financial officer of a Brooklin, Maine business, the Brooklin Boat Yard. The Department of Justice alleged that over a 13-month period, Nguyen forged and embezzled nearly 65 checks from the company, a loss of over $732,000. Additionally, Nguyen used business credit cards to run up $62,000 in personal purchases that were not authorized by the business. If Nguyen receives the maximum sentence on all counts, he will spend 48 years in a federal prison and pay over $1 million in fines.
It is increasingly common to see wire and/or bank fraud charges to be accompanied by tax evasion charges. The Internal Revenue Code requires that income “from whatever source derived” is considered when calculating a taxpayer’s taxes due to the federal government. This broad rule includes money received from illegal activity, such as wire or bank fraud. A taxpayer may file a tax return with correct information according to their W-2’s, 1099’s, etc. but if other income was received, the taxpayer has a legal obligation to report it and pay the appropriate taxes.
Tax crimes are also commonly discovered in the course of an unrelated criminal investigation, especially those that involve financial crimes. When an investigation involves a deep dive into an individual’s bank accounts and financial records, investigators can see red flags that indicate tax evasion or other tax crimes and refer that portion of the case to the IRS Criminal Investigation Division for further review.
It is critically important to understand the link between federal agencies investigating non-tax related crimes and the IRS. If you are have any tax skeletons in your closet, you may be one non-tax related investigation away from criminal tax charges. Instead of waiting to see if the government will catch on to your tax noncompliance, it is in your best interest to consult with an experienced tax attorney to determine what the best plan of action should be. An experienced tax defense attorney that is dually licensed as a CPA has the technical tax knowledge that CPA’s are known for and the in-depth legal education that only a lawyer offer.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing taxpayers from all walks of life in a myriad of different tax situations. From tax strategy for individuals or small businesses to tax audit defense, our zealous advocates have your best interests in mind when developing a strategy that best fits your unique situation Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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