Chiropractors are typically the ones who perform a back or neck adjustment. But a Massachusetts chiropractor will be experiencing an adjustment of his own as he will be transitioning into becoming a resident at a federal prison after he was recently sentenced for tax evasion.
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According to a Department of Justice press release, Richard Rogers, owned and operated a chiropractic clinic out of his home in Northborough, Massachusetts. Prosecutors alleged that between 2012 and 2016, Rogers was able to evade taxes by taking various steps to conceal his income from the IRS.
Before pleading guilty to a single charge of tax evasion earlier this year, prosecutors alleged that Rogers encouraged that his clients pay for his services in cash (as to not create a transactional record). When some clients refused to pay in cash and paid by check instead, Rogers used a nominee bank account to cash the checks. Rogers was alleged to have paid his bills using money orders and credit cards, which were opened with a fake social security number. Finally, likely anticipating that the IRS would eventually come after his assets, Rogers intentionally concealed the ownership of his home by transferring it to a trust. Although he was obligated to do so, Rogers failed to file a federal income tax return for tax years 2008 through 2016.
At his sentencing hearing, Rogers was ordered to spend six months in a federal prison. Additionally, U.S. District Judge Timothy Hillman ordered Rogers to pay over $155,000 to the IRS in the form of restitution.
The IRS and state taxing authorities are keenly aware that taxpayers who are primarily paid in cash are highly susceptible to accounting and bookkeeping mistakes, at best, or intentional understatements, at worst. Although a large majority of cash-based businesses make an attempt to follow the tax law by maintaining accurate books and records, a fair amount does not. Some cash intensive businesses see very little wrong with only reporting a fraction of their cash-based sales.
The activity described above is called skimming. Some cash-based businesses do it manually and some with a bit of technological prowess do it automatically. Automated skimming software will take a percentage of cash-based sales off of the books and records that are kept for tax purposes. When the IRS or state taxing authority asks for accounting proof that supports their tax returns, there are falsified documents at the ready.
States and the IRS have caught on to the art of skimming, whether it is automated or manual. Tax investigators have been known to place undercover agents near a business’s point of sale system to observe cash that come in on a daily basis. This helps investigators determine whether there are any irregularities in the substantiation provided by the taxpayer upon request.
If you are a business owner who has engaged in skimming or believe that your tax return has not reflected the true income earned, it is in your best interest to consult with a tax defense attorney. There is typically a benefit to coming forward and remedying the situation with the IRS before they come looking for you.
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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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