According to a Department of Justice press release, a Massachusetts business owner pleaded guilty last week to charges related to tax evasion. This story is a reminder to business owners that certain simple and seemingly harmless business practices can result in criminal tax charges and time in a federal prison.
Tax records indicate that Richard Rogers, a Chiropractor from Northborough, Massachusetts, owned and operated a chiropractic clinic out of his residence. According to an indictment that was filed with the court in June of 2018, Rogers evaded the payment of his taxes from tax years 2012 through 2016. He did so by concealing his income through various efforts that included encouraging his patients to pay using cash, using a nominee bank account to cash checks, and by paying his creditors using postal money orders. Rogers also used credit card accounts that he opened using a fake social security number.
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In an effort to avoid appearing to have assets that the IRS could go after, Rogers titled his home in the name of a trust. He likely knew that the IRS would be coming for him because, in addition to the crimes outlined above, Rogers failed to file federal individual income tax returns from 2008 through 2016, even though he was legally required to do so.
Rogers’ sentencing is scheduled for September. He faces a statutory maximum of up to five years in prison for each felony tax evasion count. Additionally, Rogers may be sentenced to serve up to three years of supervised release, which would commence after his release from federal prison. Finally, Rogers will likely be ordered to pay restitution to the IRS and could be required to pay penalties and interest.
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The defendant in this case engaged in business practices that many business owners employ. Whether business operators know that it is illegal or not and although accepting cash from customers is not illegal by itself, encouraging customers to pay in cash or write checks to fictitious individuals or entities with the intent to not report such income is illegal. The IRS frequently targets cash-intensive businesses for examination or criminal tax investigation to determine whether the true amount of income was reported for a given tax year.
If you own or operate a business that involves a heavy amount of cash or if checks received by the business are not made out to the business itself, it may be in your best interest to consult with an experienced tax attorney as soon as possible. It is likely only a matter of time until the IRS or state taxing authorities inquire into your business operations. Sometimes such inquiry will take the form of a formal examination and other times, it will take the form of an undercover agent observing the intake of cash into the business to determine whether the correct amount of income is being reported.
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The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience representing taxpayers from all walks of life. Whether you are a business owner facing a sales and use tax audit or you have received notice that your individual return is being examined, our team of zealous advocates are standing by to help you develop a sound legal strategy that will keep your personal and financial interests at the forefront of importance. Do not lose sleep over the possibility of tax evasion or other tax-related charges from the IRS or state taxing authorities. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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