Although many Americans believe that the IRS operates in a bubble, reality couldn’t be any further from the truth. Like any other government agency, the IRS and their criminal investigations team coordinate with other law enforcement entities to jointly handle criminal activity. Today’s blog highlights how an IRS investigation helped shed light on criminal theft of government funds. The key takeaway from this and similar stories is that it is in taxpayers’ best interests to have their tax return compliance squared away before IRS investigators shift any undesired attention toward them. If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon audit, you should contact an experienced tax attorney as soon as possible.
Defendant Stole Funds from Independent Living Center
According to a Department of Justice press release, Jessica Rottab, of Shreveport, Louisiana, recently pleaded guilty to a single count of federal program theft. According to federal prosecutors, IRS and state investigators discovered that Rottab served as the Executive Director for the East Texas Center for Independent Living in Tyler, Texas. As a part of her role, she had access to the center’s business bank account. Between June 2017 and September 2018, Rottab siphoned funds out of the bank account and used them to pay for her own personal expenses.
Participating in federal funding programs, the center received $10,000 annually from the U.S. Department of Health and Human Services. Much of the money that was stolen by Rottab came from the center’s federal funding. Rottab faces up to 10 years in federal prison for the theft of federal funds. She will likely also be sentenced to serve a period of supervised release. Finally, Rottab will likely be ordered to pay restitution to the U.S. government.
When IRS Investigations Can Uncover More Than Just Tax Crimes
The defendant in the story above found out the hard way that an IRS tax investigation can result in more than just a tax bill. IRS Criminal Investigation agents are law enforcement just like any other government entity. When they uncover potential criminal activity, they will alert the appropriate federal or state investigating agency and will generally perform a joint investigation. This provides an additional incentive for taxpayers to ensure that they are compliant with all of their tax filing obligations.
An easy target for the IRS are those who fail to file tax returns. Although many Americans believe that failing to file a tax return is not a big deal or will not be detected, the truth is not as straightforward. Employers send W-2 information to the IRS at the same time that they are sent to employees. If the IRS receives a W-2 for a taxpayer who did not file a tax return, the IRS flags the individual and will generally follow up to request a tax return be filed. If enough badges of fraud or tax evasion are present, the case will be handed over to the IRS Criminal Investigations team.
Falling behind on your taxes is easy to do. The good news is that there are strategies that can be implemented to come into compliance without facing some of the negative consequences that may result from waiting until the IRS comes after you. Working with an experienced tax defense attorney, you can discuss your particular situation, lay out your options, and execute on a plan that is right for you.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed returns coupled with affirmative evasion of payment) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
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