Tax evasion refers to the deliberate act of illegally avoiding or evading the payment of taxes that an individual or business owes to the government. There are many different forms of tax evasion. In many cases, perpetrators evade their tax obligations by underreporting income, inflating deductions, or hiding assets.
In July of 2023, the former owner of a Massachusetts construction company agreed to plead guilty to one count of tax evasion. The culprit, Michael Sacco, had evaded his personal income tax obligations by inaccurately reporting his company’s income for certain years and failing to file tax returns entirely during other years. His actions caused the Internal Revenue Service (IRS) to miss out on over $3 million in tax revenue.
If you need help resolving a civil or potentially criminal tax issue, seek assistance from our experienced Dual-Licensed Civil and Criminal Tax Defense Lawyers & CPAs by calling the Tax Law Offices of David W. Klasing today at (800) 681-1295 or clicking here to schedule a reduced rate initial consultation.
Massachusetts Business Owner Agrees to Plead Guilty to Tax Evasion Charge
A former construction business owner located in South Boston and Quincy is facing charges for concealing business income from the IRS. The individual, John Michael Sacco, previously based in Quincy, has agreed to plead guilty to one count of tax evasion. The plea hearing date has yet to be set by the Court.
Sacco managed construction projects using the name JMS Contracting. Between 2014 and 2021, he received more than $9 million from customers. Instead of depositing the earnings into business bank accounts, Sacco predominantly cashed the customer checks. These funds were then used to buy supplies, pay subcontractors in cash, and cover personal expenses. Sacco failed to provide necessary tax forms to subcontractors and neglected to file required forms with the IRS for payments made to subcontractors. By inaccurately reporting JMS’s income on tax returns for certain years and not filing tax returns for other years, Sacco evaded his personal income tax responsibilities. This led to a loss of over $3 million for the IRS.
The tax evasion charge carries a potential penalty of up to five years in prison, three years of supervised release, and a fine of up to $250,000 or twice the gross gain or loss, whichever is higher. Sentencing is determined by a federal district court judge according to U.S. Sentencing Guidelines and applicable statutes.
Acting United States Attorney Joshua S. Levy and Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, have announced the case. Assistant U.S. Attorney David M. Holcomb of the Securities, Financial & Cyber Fraud Unit is responsible for prosecuting.
How Are Prison Sentences Determined for Tax Evaders?
If you are found guilty of committing tax evasion, you may face prison. There are many factors that the court can consider when determining a prison sentence for a tax evader. Typically, the following factors will be assessed:
Amount of Taxes Evaded
The magnitude of taxes evaded is a central consideration in determining prison sentences for tax evasion. Courts assess the total amount of taxes the defendant attempted to evade as a crucial factor. Generally, a larger tax evasion amount corresponds to a more severe potential sentence, reflecting the gravity of the financial harm caused to the government.
Degree of Deception
The extent of deception employed in the tax evasion scheme is a significant factor in sentencing. If the defendant utilized intricate methods to conceal income or assets, forged documents, or employed complex strategies, it may lead to an increased prison term. The court examines the sophistication of fraudulent activities to assess the level of premeditation and deceit.
Criminal History
A defendant’s prior criminal record can significantly influence sentencing decisions in tax evasion cases. Previous convictions, especially those related to financial misconduct or dishonesty, may result in a more stringent sentence. The court considers the pattern of the defendant’s past behavior and whether there is a history of engaging in fraudulent or illegal activities.
Intent
The court carefully examines the defendant’s intent when committing tax evasion. Whether the evasion was deliberate and calculated or a result of negligence and misunderstanding is taken into account. Intent to defraud the government by intentionally manipulating financial information is typically viewed as a more serious offense and may lead to a harsher sentence.
Cooperation and Remorse
The defendant’s level of cooperation with law enforcement and genuine remorse for their actions can impact the sentencing decision. Demonstrating a willingness to assist authorities, such as providing information about accomplices or taking steps to rectify the situation, may mitigate the prison term. Expressing sincere regret and taking proactive measures to address the consequences of the evasion can also be factors in the defendant’s favor.
Restitution
The defendant’s commitment to rectify the financial harm caused by the tax evasion can influence sentencing. The court may consider agreeing to repay the owed taxes or taking steps to rectify the situation before or during legal proceedings. Demonstrating a genuine effort to make amends for the evasion can be a mitigating factor in determining the length of imprisonment.
Aggravating Factors
Aggravating circumstances surrounding the tax evasion case may lead to a more severe sentence. Obstructing justice, attempting to interfere with the investigation, using multiple identities, or engaging in other illicit activities alongside the evasion can exacerbate the defendant’s culpability. The court assesses these factors to determine the appropriate level of punishment.
Mitigating Factors
Conversely, mitigating factors can contribute to a less severe sentence for tax evasion. A lack of prior criminal history, cooperation with authorities, and a demonstrated commitment to compliance with tax laws are examples of factors that may work in the defendant’s favor. The court takes these considerations into account when balancing the seriousness of the offense against potential leniency.
Guidelines and Statutory Limits
Sentencing guidelines and statutory limits established by law provide a framework for judges to base their decisions on in tax evasion cases. These guidelines take into account the specifics of the offense and the defendant’s circumstances. While not determinative, they serve as important references in ensuring consistency and fairness in sentencing.
Public Interest
Courts also consider the broader public interest in maintaining the integrity of the tax system and deterring tax evasion. Imposing appropriate sentences for tax evasion serves as a deterrent to others who may contemplate engaging in similar fraudulent activities. The court’s judgment takes into consideration the potential impact of the sentence on the public’s perception of tax compliance and fairness.
Call Our Dual-Licensed Tax Lawyers & CPAs Today for Help with Your Case
Get support from our experienced Dual-Licensed Civil and Criminal Tax Defense Lawyers & CPAs at the Tax Law Offices of David W. Klasing by dialing (800) 681-1295 or clicking here to schedule a reduced rate initial consultation.
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, KovelCPAs 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!
More Commonly Asked Tax Audit Questions
- How should Tax Audits be Handled by Criminal Tax Counsel?
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- How are the 4 goals and outcomes 1 and 2 best obtained?
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- Is it my right to know why I was selected for examination?
- What can I do to prepare for an audit?
- What is an IRS civil examination?
- How IRS decides which tax returns are audited
- What are my appeal options if I disagree with IRS?
- What are my basic taxpayer rights if the IRS audits me?
- Options if I am unable to pay at the conclusion of audit
- What a 30 or 90-Day Letter from the IRS means
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- Rights to disagree with IRStaxauditor’sss findings
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- Can I record my IRS interview and is it a good idea?
- How many years of returns are at risk during an audit?
- Common reasons for the IRS to conduct a tax audit
- How to avoid negative consequences from an IRS interview
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Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
- Guilty of tax obstruction by backdating documents?
- To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
- Help! The Document I Gave the IRS Had False Information
- Tax crime aiding or assisting false return IRC §7206(2)
- What is the crime known as tax obstruction § 7212?
- What is the difference between tax perjury and tax evasion?
- What is the tax crime commonly known as tax perjury?
- What is a Klein Conspiracy?
- Increased possibility of civil action in IRS investigation
- Am I Guilty of Tax Evasion if the Law is Vague?
- What happens if the IRS thinks I committed tax crimes?
- What are ways to defend against a tax evasion charge?
- Difference between criminal tax evasion and civil tax fraud
- What accounting method does the IRS use for tax fraud
- Can I Change Accounting Method to the Accrual Method
- What is the willfulness requirement for tax evasion?
- I didn’t know I committed tax fraud. Can I get off?
- Concealed assets from IRS. Can I avoid tax evasion charges
- How government proves I willfully engaged in tax evasion
- What is the venue or court where a tax crime case is heard?
- Must the IRS prove tax crimes beyond a reasonable doubt?
- Is it a crime to make false statements to the IRS?
- Will the IRS overlook my tax evasion if it’s minor?
- Failed to tell IRS about my nominee account
- Audit risk with cash based business transactions
- How to defend a client charged with tax evasion
- Is it tax evasion if I didn’t file income tax return?
- Government says I attempted to evade my taxes. Now what?
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- Government proof I “willfully” failed to pay taxes
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- Being audited after using a tax professional
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- How the government proves deficiency in a tax evasion case
- Do prior tax crimes factor into new IRS tax convictions?
- Requesting conference before investigative report is done
- Requesting conference after IRS Special Agent Report
- What are my rights during an IRS criminal investigation?
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- Failure to keep records or supply information
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- What is attempting to evade payment of taxes?
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- IRC §7201 attempt to evade vs. common-law crime of attempt
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- How government proves a taxpayer attempted tax fraud
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- Are Tax Laws Constitutional?
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- What is a proffer agreement and what are the risks?
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- Limited use immunity from proffer agreements
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