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According to a press release published by the Department of Justice, Iowa businessman Michael Collins, 49, pleaded guilty to a single count of tax evasion in U.S. District Court for the Southern District of Iowa in late December. This story highlights the ongoing efforts of the IRS and Department of Justice to identify and bring down those who evade their tax obligations.
Collins, who according to court documents was one of the owners of an Iowa real-estate development firm, received a large payout in 2006 that resulted from the firm’s stellar fiscal performance. When it came time to prepare his taxes for the 2006 year, Collins failed to include the $289,000 that he earned in connection with his ownership in the real-estate development firm.
In 2008, the IRS notified Collins that he improperly omitted his additional 2006 earnings. Collins did not contest the findings of the IRS and filed an amended return that included the missing income. The amendment of the return resulted in a federal tax liability of over $100,000, an amount that Collins would never pay.
Court records reveal that Collins owned a trucking and excavation company from 2006 up until his arrest that generated over $5.5 million in gross revenue. In an attempt to appear to be unable to pay his tax debt, Collins registered the business and its bank accounts in the names of nominees. Prosecutors alleged that Collins filed fraudulent tax returns on behalf of the business, listing nominees as owners and reporting that he earned no income from the business. Prosecutors further allege that Collins paid his personal expenses using business bank accounts while telling at least one IRS employee that his only source of income was unemployment benefits. DOJ prosecutors estimate that Collins caused a tax loss of over $250,000.
Sentencing is scheduled for mid-May and Collins will face up to five years in federal prison on the tax evasion count. Additionally, District Court Judge Stephanie M. Rose is expected to order Collins to pay restitution to the IRS and to serve supervised release following his imprisonment.
Although Treasury budget cuts may lead one to believe that the IRS will have less resources to crack down on tax evaders, technological advancements are allowing IRS computers to identify potential tax fraud and evasion quickly and effectively. If you find yourself in the crosshairs of an IRS or state tax audit, or criminal tax investigation it is in your best interest to contact an experienced criminal tax defense attorney as soon as possible.
A tax attorney has both technical tax knowledge and extensive legal education in criminal procedure, Constitutional law, evidence, and criminal law. A tax attorney will be present at all critical stages of your interaction with state or federal tax authorities to ensure that you are positioned to walk away from the situation with as little financial damage as possible and where possible strive to prevent jail time.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing taxpayers from all walks of life across Southern California. Whether you are facing an IRS or state tax examination or are considering applying for the Offshore Voluntary Disclosure Program, our zealous tax advocates are ready to assist. Don’t let the IRS keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
Here is a link to our practice video on warning signs than an audit has gone criminal.
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Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices in San Bernardino, Santa Barbara, Panorama City, and Oxnard! You can find information on all of our offices here.