According to a Department of Justice press release, a Maryland business owner recently pleaded guilty to tax evasion after underreporting business income. Intentionally underreporting business income is one of the most common tactics used by those trying to cheat the IRS, and unsurprisingly, it is one of the most common reasons for criminal tax prosecutions. If you have failed to file a tax return for one or more years, or have intentionally underreported your business income on your income tax filings, you should contact an experienced tax defense attorney for assistance in bringing you into tax compliance without facing criminal tax prosecution! But… you must knock on their door before they bang your door down.
Defendant Intentionally Underreported Significant Amounts of Business Income
Court records reveal that Jerry Lee Redman, a resident of Severn, Maryland, and owner of Redman Services Inc., (RSI) a paving and construction firm, admitted to purposefully evading his federal income taxes. Prosecutors alleged that from 2015 to 2018, Redman misrepresented RSI’s gross earnings in the company’s tax filings. He redirected clients to issue checks in his name instead of RSI’s, which he then deposited into his personal account. Such transactions went unrecorded in RSI’s corporate income tax returns. Additionally, Redman omitted other income sources from RSI and manipulated funds from the company’s account for personal use, neither of which he declared in his personal tax returns. He further distorted some of these personal expenditures as corporate expenses in RSI’s filings. Due to his willful actions, the IRS incurred a tax loss of approximately $666,113.
The defendant will be sentenced at a later date. He faces a maximum prison sentence of five years. In addition, he could be subject to supervised release, monetary penalties, and be required to pay restitution to the IRS, representing the tax loss that he caused.
Understanding the Difference Between Legal and Illegal Tax Strategies
As noted earlier in this story, it is not uncommon for business owners to work toward lowering their tax bill. It’s not only uncommon, but it can also be legal. There are a variety of tax breaks and incentives that businesses can take advantage of to lower their overall tax burden. What business owners are not permitted to do is lie about the income that they earned or overstate the amount of deductions that they are entitled to. They also cannot claim tax credits to which they are not entitled too. Doing the latter can result in severe civil and criminal penalties and will likely outweigh any of the ill-gotten benefits that result from such fraudulent activity.
Getting Back into Tax Compliance Without Facing Criminal Tax Prosecution
If you have filed a tax return that was false or have failed to file a tax return for one or more years, it is in your best interest to contact an experienced civil and criminal tax defense attorney. Together with your seasoned tax lawyer, you will work to establish the pertinent facts of your case and develop a roadmap that will aim to bring you into tax compliance. In general, taxpayers who work toward rectifying their situation will have exponentially better outcomes than those who wait until the IRS initiates a criminal investigation or refers the case to the Department of Justice for criminal tax prosecution.
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 an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) 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 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, KovelCPAs, 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!
We Are Here for You
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business, and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
In addition to our fully staffed main office in downtown Irvine California, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) California-based satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad, Sacramento. We also have unstaffed (conference room only) satellite offices in Las Vegas Nevada, Salt Lake City Utah, Phoenix Arizona & Albuquerque New Mexico that solely handle Federal & California Tax issues.
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More Commonly Asked Tax Audit Questions
- How should Tax Audits be Handled by Criminal Tax Counsel?
- How to survive audit when I cheated on return being audited
- What is an eggshell audit?
- What is a reverse egg shell audit?
- Why is a reverse egg shell audit dangerous for a taxpayer?
- Warning signs of a criminal referral from an IRS audit
- Effective tax defense counsels goals in an egg shell audit?
- How are the 4 goals and outcomes 1 and 2 best obtained?
- What are the possible outcomes of an egg shell audit?
- Is it my right to know why I was selected for examination?
- What can I do to prepare for an audit?
- What is an IRS civil examination?
- How IRS decides which tax returns are audited
- What are my appeal options if I disagree with IRS?
- What are my basic taxpayer rights if the IRS audits me?
- Options if I am unable to pay at the conclusion of audit
- What a 30 or 90-Day Letter from the IRS means
- What is involved with appealing disagreements?
- Rights to disagree with IRStaxauditor’sss findings
- Can I stop the IRS from repeatedly auditing me?
- Can I have the examination transferred to another area?
- Can I record my IRS interview and is it a good idea?
- How many years of returns are at risk during an audit?
- Common reasons for the IRS to conduct a tax audit
- How to avoid negative consequences from an IRS interview
- Have to agree to interview by taxing authority directly?
- Are all audits the same?
- What should I do if the IRS is investigating me?
- What if I don’t respond to a taxing authority audit notice
- Your rights during an IRS tax audit
- Risks of attending an IRS audit without a tax lawyer
- Most common audit technique used by taxing authorities
- Don’t go into an IRS audit without representation
- Why hire an attorney to represent me in an audit?
- Why hire David W. Klasing to represent me in an audit
Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
- Guilty of tax obstruction by backdating documents?
- To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
- Help! The Document I Gave the IRS Had False Information
- Tax crime aiding or assisting false return IRC §7206(2)
- What is the crime known as tax obstruction § 7212?
- What is the difference between tax perjury and tax evasion?
- What is the tax crime commonly known as tax perjury?
- What is a Klein Conspiracy?
- Increased possibility of civil action in IRS investigation
- Am I Guilty of Tax Evasion if the Law is Vague?
- What happens if the IRS thinks I committed tax crimes?
- What are ways to defend against a tax evasion charge?
- Difference between criminal tax evasion and civil tax fraud
- What accounting method does the IRS use for tax fraud
- Can I Change Accounting Method to the Accrual Method
- What is the willfulness requirement for tax evasion?
- I didn’t know I committed tax fraud. Can I get off?
- Concealed assets from IRS. Can I avoid tax evasion charges
- How government proves I willfully engaged in tax evasion
- What is the venue or court where a tax crime case is heard?
- Must the IRS prove tax crimes beyond a reasonable doubt?
- Is it a crime to make false statements to the IRS?
- Will the IRS overlook my tax evasion if it’s minor?
- Failed to tell IRS about my nominee account
- Audit risk with cash based business transactions
- How to defend a client charged with tax evasion
- Is it tax evasion if I didn’t file income tax return?
- Government says I attempted to evade my taxes. Now what?
- I forgot to pay my taxes or estimated tax. Is this a crime?
- Government proof I “willfully” failed to pay taxes
- 5 Ways to Respond to Tax Evasion Charges
- Being audited after using a tax professional
- Rules for what an IRS agent can do while investigating me
- How tax preparers, attorneys and accountants are punished
- How the IRS selects tax crime lead for investigation
- How does the IRS prosecute suspected tax crimes?
- Does IRS reward informant leads for suspected tax crimes?
- How the government proves deficiency in a tax evasion case
- Do prior tax crimes factor into new IRS tax convictions?
- Requesting conference before investigative report is done
- Requesting conference after IRS Special Agent Report
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- CID special agent’s report for criminal prosecution
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- IRS methods of gathering evidence to prove tax crime
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- Failure to keep records or supply information
- Failure to make a return, supply information, or pay tax
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- What is income tax evasion and how is it punished?
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- IRC §7201 attempt to evade vs. common-law crime of attempt
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- How government proves a taxpayer attempted tax fraud
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- Are Tax Laws Constitutional?
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- What is a proffer agreement and what are the risks?
- Why to have an attorney to review a proffer agreement
- Why enter into a proffer agreement?
- Limited use immunity from proffer agreements
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