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.
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.
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:
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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!