An attorney from Texas is learning the hard way that going the extra mile for a client can result in serious prison time if that extra mile involves breaking the law. Tax law is complex and often requires creative solutions to various problems. Nonetheless, it is the duty of a competent attorney to go about solving those problems in a manner that is consistent with the law and without jeopardizing the livelihood of themselves and their client.
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According to a Department of Justice press release, Jack Stephen Pursley, a Houston-area attorney, was convicted of three counts of tax evasion and one count of conspiracy to defraud the United States. Evidence at trial proved that in an effort to assist a client repatriate offshore earnings to the United States without paying tax, Pursley devised a scheme whereby significant monies were “invested” in a U.S. company through an entity in the Isle of Man.
Pursley’s former client owned a profitable business with a bank account in the Isle of Man. If the money were to be transferred directly to the former client’s bank account, various sections of the Internal Revenue Code would have required tax to be paid currently on the transfer. By “investing” the money in a U.S. company, most of those tax laws wouldn’t apply and Pursley’s former client would have access to the funds in their entirety. In exchange for his role in the scheme, Pursley received nearly $5 million and a 25 percent stake in his former client’s business.
In addition to his participation in the repatriation scheme with his former client, Pursley failed to include the nearly $5 million of payments he received in his gross income on his individual federal income tax returns. Pursley attempted to disguise his withdrawals of the funds as a tax-free loan or a return of capital.
Sentencing is scheduled for this winter. Pursley faces up to five years in prison for each count of tax evasion and an addition five years related to the conspiracy count. In addition to any prison time Pursley must serve, he will likely also be ordered to serve a period of supervised release and be ordered to pay restitution to the IRS.
Whether you are a taxpayer who is looking to get right on your taxes or are a tax professional who may have engaged in conduct that could be considered illegal, it is in your best interest to contact an experienced criminal tax defense attorney. In most cases, better outcomes can arise out of preemptive corrective action than result if the situation is ignored until the IRS or state tax authorities raise the issue.
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The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing taxpayers from all walks of life. Whether you are a business owner facing a sales and use tax audit or you have received notice that your individual return is being examined, our team of zealous advocates are standing by to help you develop a sound legal strategy that will keep your personal and financial interests at the forefront of importance. Do not lose sleep over the possibility of tax evasion or other tax-related charges from the IRS or state taxing authorities. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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