When it comes to enforcement of the laws, any prosecutor or investigator will tell you that the biggest obstacle they face is resources. The United States is a large country with hundreds of millions of people and tens of thousands upon thousands of companies doing business here. Most of these individuals and entities have a duty to file tax returns and, potentially, to submit other informational returns regarding offshore accounts and other tax and financial details.
Due to the sheer volume of tax filings in the United States, it goes without saying that it would be unworkable for humans to review each and every filed return. Therefore, the IRS has implemented computer systems and other machines that can process tax returns for routine errors and misstatements far faster than a human ever could. The IRS also relies heavily on the deterrence effect to discourage taxpayers from cheating on their taxes. Therefore, in the lead-up to the tax filing deadline in April, it is extremely common for the IRS and Department of Justice to announce the results of an array of criminal and civil enforcement actions against individual taxpayers and businesses.
Manco & Manco opened on the Ocean City, New Jersey boardwalk in the 1950s and has served a steady stream of vacationers and locals since its founding. Business in Ocean City was so strong that the company expanded to four locations along the Boardwalk and in nearby Sommers Point.
However, this success was apparently not enough for Manco & Manco owners Charles and Mary Bangle. In 2015, the owners pleaded guilty to criminal tax charges. Charles Bangle pleaded guilty to tax evasion and structuring while Mary Bangle pleaded guilty to making a materially false statement to the IRS. The tax scheme involved taking various steps to conceal revenue thereby reducing the business’s income tax obligations.
After six postponements, the couple is scheduled to face sentencing at the end of February 2017. Charles could face up to 15 years in prison while Mary could face up to a five-year prison sentence.
Reggious Sanchester Bell was a former accountant for a non-profit government contractor. Through his position at the non-profit, Bell was issued a company credit card. For reasons that are not entirely clear, Bell was also able to convince the company to provide him with an additional company credit card in a fictitious name and Social Security number. Bell used the credit cards to run-up personal charges for airfare, luxury goods, electronics, and hotel stays. Bell concealed his fraud by deleting unauthorized purchases from monthly credit card statements and manipulating the company’s account ledgers. In all, Bell embezzled about $1.3 million and failed to report this income on his 2011 or 2012 tax returns.
Bell pleaded guilty to one count of theft and two counts of tax evasion. Bell must pay restitution to the company for the amounts he embezzled. He was sentenced to a two-and-a-half-year prison sentence for his crimes.
In yet another prosecution targeting a business where many transactions are in cash, a multiple count indictment was filed against Tony Cowden, owner of Tony’s Pizza House. Mr. Cowden faces allegations of tax evasion from April 2008 until March 2015. According to statements by prosecutors, like many business owners, Mr. Cowden thought that cash transactions would be untraceable or at least provide plausible cover for his tax evasion activities. Prosecutors claim that Mr. Cowden would encourage customers to pay in cash by offering cash discounts. When customers paid in cash, IRS agents claim that Mr. Cowden would pocket the money and fail to include it in restaurant revenues. Mr. Cowden was also accused of and charged with fraudulently claiming Social Security benefits while he worked.
If you have been accused of a tax crime, you face serious consequences which can include a federal prison sentence. It is important to recognize that there is no such thing as a foolproof tax evasion scheme and that IRS auditors will simply follow the money trail and are very adept at discovering tax fraud. If you are concerned about a civil tax audit transforming into a criminal tax prosecution, the tax lawyers of the Tax Law Offices of David W. Klasing may be able to assist. To schedule a confidential reduced rate consultation, please call 800-681-1295