According to a Department of Justice press release, a former tax preparer from New York was sentenced to serve 15 months in prison for his illegal actions relating to filing false tax returns for both himself and on behalf of his clients. This story is a reminder to taxpayers that although the tax laws can be used to achieve preferable results, tax preparers or taxpayers who file their returns in a knowingly false manner will likely find themselves in the crosshairs of the extensive IRS tax enforcement effort. If you are unsure about the validity of a tax return position or if you have not filed your tax returns for one or more years, you should strongly consider consulting with an experienced tax attorney as soon as possible.
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Defendant Over-Inflated Clients’ Tax Deductions, Convicted
Court documents reveal that Emerson Gamory was the sole owner and operator of Emerson Gamory Income Tax Services, Inc. Gamory offered tax preparation services in Brooklyn, serving the tax preparation needs of those in the New York City area. Between 2013 and 217, Gamory admitted that he falsified tax returns of his clients by claiming fraudulent deductions for expenses that his clients never incurred. Such non-existent expenses included education and charitable expenses. Additionally, Gamory failed to include all of the income from his tax preparation business on his personal tax returns.
In all, the IRS estimated that Gamory’s illegal activity resulted in a tax loss to the IRS of more than $550,000. In addition to his prison term, Gamory will be required to serve one year of supervised release and pay $574,565 in restitution to the IRS.
Tax Fraud vs. Tax Planning: The Important Difference
As the defendant likely learned in the story above, lying on tax returns to reduce tax liability or secure a fraudulent refund may pay in the short term, but can ultimately have disastrous consequences. Generally, schemes to illegally lower tax liability involve understating income or overinflating (or simply making up) expenses that result in deductions. Although it is not possible to justify fabricated reductions to income or large unsubstantiated deductions, careful tax planning based on a client’s tax profile is one of the completely legal functions of an experienced tax attorney.
Regardless of the industry that a business is operating in, there are generally numerous opportunities in the tax code that allow for preferable treatment based on particular sets of circumstances. A business owner can work with his or her experienced tax planning attorney to plan into some of the preferable tax regimes and stay away from some of the Internal Revenue Code’s pitfalls.
If you have already filed a tax return that you believe is incorrect, it is in your best interest to resolve the discrepancy before the IRS discovers it. As a general matter, taxpayers who proactively work to get into compliance have better outcomes than those who wait until the IRS examines their tax return after discovering potential wrongdoing. Even at that point, a taxpayer who participates in the examination process with the assistance of an experienced tax attorney faces fewer pitfalls than taxpayers who go at it alone.
Note: As long as a taxpayer that has willfully committed tax crimes 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 prosecution, the taxpayer can be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously receive a break on the civil penalties that would otherwise apply. It is imperative that you hire an experienced and reputable tax defense attorney to take you through the voluntary disclosure process. 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. See our Testimonials to see what our clients have to say about us!
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Contact an Experienced Tax Attorney Today
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing a diverse group of taxpayers. From individuals to middle-market businesses and beyond, our team of zealous advocates will assist in the development of a strategy to help you reach your specific goals and objectives. Whether you are under a tax examination or are in need of tax planning advice, contact the Tax Law Offices of David W. Klasing today, online or by phone at (800) 681-1295, for a reduced-rate consultation.
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