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According to a Department of Justice press release, a Massachusetts woman recently pleaded guilty to tax and drug offenses after leading a multi-million dollar drug distribution operation. Although likely not the business that most of our readers are engaged in, this story should remind taxpayers that any kind business (even a patently illegal one) must properly report their revenues and abide by federal and state employment tax laws. If you or your business has failed to file a tax return for one or more years, or have failed to properly report income or items of deduction, it is in your best interest to contact an experienced tax defense attorney as soon as possible.
Court records reveal that Deanna Martin, of Milton, Massachusetts, owned and operated Northern Herb, an illegal marijuana distribution operation, between 2015 and 2018. Operating illegally, Northern Herb delivered marijuana to individuals without requiring that they prove that they had a license to purchase and use medicinal marijuana. Additionally, Northern Herb did not require that an actual person needed to be present at the time of delivery, leaving orders in unattended locations.
Federal authorities estimate that Northern Herb had total revenue of more than $14 million between May 2016 and July 2018. Northern Herb was also estimated to have had 25 employees, none of which Martin maintained proper payroll processes for. Even if Martin contended that her staff were properly characterized as independent contractors, she failed to comply with the proper tax processes, such as issuing a Form 1099. In addition to not complying with employment related tax laws, Northern Herb did not file tax returns or pay income taxes on its substantial profits.
Martin’s guilty plea was accepted by the court and her sentencing was scheduled for later this fall. Martin faces up to 20 years in federal prison on the drug counts, 20 years in prison on the money laundering counts, and finally, up to five years in prison on the tax evasion count. Additionally, Martin could be sentenced to serve a period of supervised release and may have to pay restitution to the IRS, representing payment for the tax loss that she caused.
Individuals and businesses, regardless of the legality of their income-generating activities, are required to file tax returns and pay tax. Likewise, if a taxpayer is engaged in a criminal enterprise and hires individuals to assist, such taxpayer is still required to abide by employment tax laws. Although somewhat counter-intuitive, it is crucial for businessmen and women, regardless of whether their business activity is legal, to consider the tax exposures that they may face by not filing tax returns or following employment tax laws.
If you have failed to file a tax return for one or more years, have underreported your income, or have failed to properly withhold, account for, and remit payroll-related taxes to the IRS, it is in your best interest to contact an experienced tax defense attorney. Together with your seasoned tax lawyer, you will work to identify your civil and criminal exposures and agree on a course of action that keeps your physical and financial freedom top of mine. Additionally, while you are being represented by a tax defense attorney, you will not have to go up against the IRS or state taxing authorities alone.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed domestic or foreign tax and information returns coupled with affirmative evasion of U.S. income tax on domestic or offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore 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, 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!
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 main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
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