According to a Department of Justice press release, a former Luzerne County, Pennsylvania, attorney has pleaded guilty to tax evasion for the year 2016, after concealing substantial legal fees he earned. This case highlights the serious consequences of attempting to fraudulently evade federal tax obligations. If you have failed to file a truthful tax return or have not filed a tax return for one or more years, it is imperative that you discuss your case with an experienced tax defense attorney as soon as possible in order to come back into tax compliance in a manner that avoids criminal tax prosecution.
Defendant Concealed Millions in Legal Fees, Evaded Taxes for Years
Court records reveal that Robert Powell, who had previously been disbarred, attempted to evade substantial taxes due for 2016 by using nominee bank accounts and providing false information to his accountant and the IRS. After disposing ownership of The Powell Law Group following his disbarment, Powell retained the right to collect 90% of future legal fees earned by the firm. The firm received approximately $120 million in fees from a large mass tort litigation settlement in 2015.
Rather than depositing loan proceeds and legal fees into the firm’s accounts for proper distribution, Powell diverted funds to nominee accounts under his control. He used the money for personal debts and expenses, as well as for the benefit of himself and his former law partner. Powell received millions in income from 2010 to 2022 but failed to file tax returns for any of those tax years.
During a 2019 IRS audit, Powell made false statements to IRS agents in an effort to conceal his income and control over bank accounts. Despite his attempts to evade taxes, Powell eventually pleaded guilty to tax evasion and agreed to pay full restitution to the IRS, with the amount to be determined by the court as part of sentencing. In addition to restitution, Powell may be sentenced to serve time in federal prison and may also be ordered to serve a term of supervised release.
The Importance of Seeking Legal Counsel for Tax Compliance
The repercussions of tax evasion, as seen in the case of the defendant above, can be significant and life changing. If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
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!
