Tax evasion carries severe penalties, potentially resulting in substantial fines, lengthy prison sentences, and mandatory restitution to the government. Usually, prison sentences will only be levied against those who have deliberately & illegally evaded their tax obligations. Such penalties can be avoided by those who simply made honest mistakes on their tax returns.
For example, a Georgia man named Samir Patel has been sentenced to two years in prison for evading federal income taxes. Patel, who worked as a tax preparer, deliberately concealed over $1.28 million in income from his amusement machine business, resulting in a $550,000 tax loss to the Internal Revenue Service (IRS). The sentencing was announced in 2023 by the Department of Justice, with Patel also being ordered to pay fines and restitution as part of his punishment.
If you have been accused of tax fraud, are under eggshell or reverse eggshell audit or facing a potential criminal tax investigation get help from our Dual-Licensed 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 online.
Overview of Samir Patel’s Tax Evasion Case
A resident of Statesboro, GA, named Samir Patel, has been sentenced to a two-year prison term for deliberately & fraudulently understating his federal income taxes. Patel, who worked as a tax return preparer for a prominent national preparation firm from 1999 to 2021, expanded his involvement in 2015 by purchasing a franchise in Claxton, Georgia. Despite his managerial role, which involved hiring, training, and overseeing other tax preparers, Patel evaded his tax obligations by filing falsified returns from 2015 through 2017. He concealed over $1.28 million in income, primarily from his business venture, S&W Amusements. This enterprise operated coin-operated amusement machines in various convenience stores and gas stations. The resulting tax loss to the IRS totaled approximately $550,000.
Chief Judge J. Randal Hall of the Southern District of Georgia handed down Patel’s sentence, which also includes three years of supervised release, a $95,000 fine, and restitution of $551,450 to the United States. The investigation into Patel’s tax evasion was conducted by the IRS Criminal Investigation unit, with prosecution handled by Trial Attorneys Matthew C. Hicks and Richard J. Hagerman from the Department of Justice Income Tax Division, alongside Assistant U.S. Attorney John P. Harper III for the Southern District of Georgia.
The U.S. government does not treat tax crimes lightly. Fortunately, if you have encountered a high-exposure tax issue, our Dual-Licensed Tax Lawyers and CPAs will help determine the best course of action. We are ordinarily successful at avoiding criminal penalties like those faced by Patel in most of the issues we handle.
Potential Penalties Levied in Tax Evasion Cases
As shown by the previously mentioned case of Samir Patel, several types of penalties may be levied in a tax evasion case. For instance, a defendant in such a case may face any of the following:
Civil Penalties
Civil penalties for tax evasion can include substantial fines imposed by the Internal Revenue Service (IRS) as punishment for intentionally underreporting income or claiming false deductions. These fines may amount to a percentage of the unpaid taxes owed, further increasing the financial burden on the taxpayer. The civil fraud penalty is 75% of the tax to have been found to have been intentionally underreported. The penalty is extremely dangerous in that if they have the evidence to assess it, they also have the evidence needed to criminally prosecute you.
Criminal Tax Penalties
Individuals convicted of tax evasion may face severe criminal penalties, including imprisonment. The length of imprisonment can vary depending on the severity of the offense and the amount of taxes evaded. Additionally, convicted individuals may be required to serve a period of supervised release following their prison term, during which they are subject to specific conditions set by the court.
Restitution
Tax evaders are often required to pay restitution to the government, reimbursing the IRS for the taxes owed but not paid. This restitution is intended to compensate the government for the financial losses incurred because of the taxpayer’s illegal actions.
Other Potential Consequences of Tax Evasion
In addition to criminal and civil penalties, defendants may face several other types of consequences in tax evasion cases. In certain cases, these additional consequences can be just as harmful as the criminal and civil penalties mentioned above.
Reputational Damage
A tax evasion charge can lead to significant reputational damage, tarnishing the individual’s character and integrity in the eyes of the public, colleagues, and potential employers. The stigma associated with being accused or convicted of tax evasion can have lasting effects on one’s personal and professional relationships, eroding trust and credibility.
Financial Strain
Apart from fines and restitution, tax evasion charges can impose significant financial strain on the individual and their family. Legal fees associated with defending against tax evasion allegations can be substantial, adding to the already hefty financial burden. Moreover, the loss of income resulting from imprisonment or the inability to secure employment due to reputational damage can further exacerbate financial difficulties.
Professional Consequences
Tax evasion convictions can lead to the loss of professional licenses or certifications, limiting future career opportunities and prospects. This can have long-term implications for the individual’s ability to work in certain industries or professions, hindering their professional advancement and financial stability.
Personal Consequences
The stress and emotional toll of facing criminal charges and potential imprisonment can strain personal relationships and take a toll on mental well-being. Family dynamics may be disrupted, and the individual may experience feelings of isolation and shame. Additionally, the stigma associated with a tax evasion conviction can impact the individual’s sense of self-worth and identity, leading to long-term psychological repercussions.
How We Can Help if You Have Been, or Merely are at Risk of Being, Accused of a Tax Crime
Our experienced legal team provides comprehensive legal support to those who have been, or merely have risk of being, accused of tax crimes. With extensive knowledge of tax laws and regulations, we can offer personalized strategies to protect defendants’ rights and interests. From meticulously reviewing financial records to crafting persuasive arguments in court or before the IRS, we will strive to achieve the best possible outcome for our clients. We understand the complexities of tax evasion cases and work diligently to navigate the legal process effectively.
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 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!
We Are Here for You
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
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