Although most attorneys, accountants, and other professionals strive to hold themselves to a high moral and ethical standard, there will always be a few bad apples that will act in their own self-interest in derogation of tax law. According to a Department of Justice press release, Michael Thiel, 66, criminal defense attorney from Baton Rouge, Louisiana, was sentenced to 30 months in prison for evading federal income and employment taxes.
It is important for taxpayers to realize that tax evasion can be charged both with evading the assessment of tax and after a tax has been assessed, by evading payment of tax. Per court documents, Thiel failed to file federal tax returns for tax years 2003 through 2013 nor did he pay the tax that he owed in a timely manner. Although he had the means to pay his tax debt, Thiel evaded paying his tax obligations by hiding his income and liquid assets using nominee entities and trusts. The trusts were formed so that Thiel was the trustee, beneficiary, and fiduciary. In 2008, in an effort to avoid detection of his deceit, Thiel created two additional trusts in the name of family members for the purpose of safekeeping his income.
In December of 2016, Thiel pleaded guilty to evading the payment of federal income and employment tax. All in all, Thiel shorted the government by nearly $1 million. In addition to his sentence of 30 months in a federal prison, Thiel will spend two years under supervised release and must repay approximately $996,000 to the IRS in restitution.
In addition to paying federal income tax, employers are required by federal law to withhold federal taxes from the paychecks of employees, including themselves. The amounts withheld must then be remitted to the IRS. Additionally, employers are required to pay employment tax for each employee. Although many (if not most) businesses hire a third-party payroll processing company to perform these services, there are an appreciable amount of small businesses that perform these duties manually. In those situations, it is easy to see how a taxpayer can fall into employment tax noncompliance where a business is having cash flow problems. Additionally, employment tax withholding and remittance is not the easiest or most intuitive process, and thus, it is possible that a business may fail to correctly comply with their payroll withholding and remittance obligations inadvertently. On the other hand, there are some employers who simply refuse to collect employment tax, or worse, collect employment tax and intentionally use the funds for personal (and typically extravagant) expenses.
The IRS and their Criminal Investigations Division understand that some businesses do not operate within the bounds of the law. In the process of their attempt to single out those who fail to do so, some small and medium-sized businesses find themselves unfairly targeted in an employment or income tax examination or criminal investigation. Whether you know that you or your company has made mistakes with regard to income or employment taxes or if you simply feel that you are being unfairly targeted, the first step to resolving the issue is contacting an experienced tax attorney.
The Tax Attorneys, CPAs and EAs at the Tax Law Offices of David W. Klasing have extensive experience representing small to medium-sized business owners in a myriad of different civil and criminal tax situations. From routine tax examinations to full-blown criminal tax investigation, our zealous advocates are ready to defend and protect your physical and financial freedom. When the IRS or state taxing authority comes knocking, they bring with them an army of highly trained lawyers and civil and criminal tax investigators whom are trained and experienced at securing civil tax assessments, penalties and interest and where the situations warrants, criminal tax convictions. It is wise to answer with a team of experienced tax professionals standing firmly beside you. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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