We represent clients from all U.S. and International locations regarding Federal Tax and California Issues.
As children, many of us had something imaginary. Whether it was a pet or a friend, we created something from nothing and went about our lives pretending that it existed. What if we were to do that today? How much trouble would it get us into? Michael Stover from Plymouth, Michigan did just that and it turns out that he will get more than just a time-out. If you find yourself facing a similar situation, you should seek out a tax litigation lawyer before it’s too late.
According to a press release by the Department of Justice, Michael Stover, pleaded guilty last week to one count of wire fraud and one count of federal tax evasion. From 2004 to 2010, Stover was the President of Omni Facility Services Inc., a company in the business of providing janitorial services through the use of subcontractors. Part of the job of Omni’s President was to review and approve subcontractor contracts and compensation.
During Stover’s time as President, he created a fictitious company called Envirovac. Much like an imaginary pet dragon, Envirovac didn’t manifest itself to anyone other than Stover. Envirovac wasn’t even an incorporated company. Because Stover was the lone executive of Omni that was in charge of making decisions about the approval of subcontractors, he would pass Envirovac off as a service-providing enterprise and approved over $2 million in payments to the phony company.
Once the IRS Criminal Investigations Division got a hold of the case, everything that was once imaginary in Stover’s life because painfully real. Even though Envirovac was not a real company and the money that was being embezzled to Stover’s personal bank account was illegal, as an American taxpayer, there is still an obligation to pay taxes on income that you receive. Because Stover failed to claim the millions of dollars that he stole from Omni (and did so willingly), he committed tax evasion in addition to wire fraud.
Stover faces 20 years behind bars for the wire fraud alone. The court could tack on an additional five years for the tax evasion count. To add insult to injury, not only will Stover be in prison for a very long time, but also like his phony company, the money in his bank account will likely disappear. He is liable for up to $250,000 in fines for each count and could be ordered to pay restitution to the IRS. A federal judge in Michigan will sentence Stover in early 2015.
Michael Stover likely didn’t foresee that his imagination would land him in a federal prison for a significant amount of time. When the IRS begins to investigate your situation, things can spiral downward very quickly. Even if you have made an honest mistake, your case can end up at the center of a Department of Justice or IRS criminal investigation. It is in your best interest to nip the problem in the bud before it gets to that point. If you receive a notice that you are being audited, you have an opportunity to seek the opinion of a tax attorney and have them accompany you to any meeting with the IRS.
The experienced tax professionals at the Tax Law Offices of David W. Klasing are here to help you when the IRS comes knocking. Our staffs have years of experience of audit and criminal tax defense. Many taxpayers believe that if they go into an audit alone, they will be able to sweet talk their way out of their situation. That is simply not the case. It is a mistake that our tax professionals see time after time and are here to help you avoid. Call the Tax Law Offices of David W. Klasing today at (800) 681-1295 for a reduced-rate consultation.