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According to a Department of Justice press release, a Michigan father and son were recently indicted for tax fraud and obstruction after allegedly failing to properly report their true income, inflating business-related expenses, and urging potential witnesses to provide false information to federal investigators. This story should serve as a reminder to taxpayers that the reporting of misinformation on a tax return can result in a criminal investigation or worse. If you have failed to file a tax return that accurately reflects your true income for one or more years, it is in your best interest to contact an experienced tax defense attorney to determine the most effective strategy to come into tax compliance.
Court records reveal that Karl Walls and his son, Harold Walls, both of Clare, Michigan, operated the Days Inn Clare. Karl Walls owned the hotel, while Harold managed its daily operations. Federal prosecutors allege that between 2013 and 2017, Harold took steps to ensure that he was not compensated through the hotel’s payroll system used to pay other employees, but instead through other means such as through the payment of his personal non-hotel related expenses through the hotel’s operating bank account. During those years, Harold allegedly failed to include such amounts as a part of his annual individual income tax return.
For tax years 2012 through 2017, investigators believe that Harold Walls caused his father to provide tax preparers fraudulent and otherwise misleading information about the hotel’s operations in the process of completing Karl Wall’s annual individual income tax return. Federal prosecutors allege that the information provided to Karl Walls’ tax preparer omitted substantial amounts of room revenue, as well as indicated that various inflated expenditures were sustained.
Lastly, the federal indictment includes charges related to the Walls’ activity after learning that a criminal investigation had been launched. Prosecutors allege that after informing Harold Walls that he was the subject of a criminal tax investigation, he made several false statements to the IRS. Additionally, Karl Walls allegedly made attempts to pressure witnesses, including a hotel employee, to provide false information to the IRS and other federal prosecutors.
If convicted, Harold Walls faces up to three years in prison for each count of filing false tax returns, aiding in the preparation of false tax returns, and attempting to obstruct the IRS. His father, Karl Walls, was charged with two counts of witness tampering and faces up to 20 years in federal prison on each count. Both defendants face a term of supervised release and monetary penalties in the form of restitution.
This story should serve as an example as to what can happen when taxpayers intentionally (or negligently) provide false information to their tax preparers or complete their tax returns with inaccurate information. Although many taxpayers feel as if they are but a small fish in a very large pond, Americans are investigated and prosecuted for tax crimes every day. And as the Walls’ may very well learn the hard way, the consequences can be devastating.
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 inquiry, audit or criminal tax investigation by the IRS or state tax authorities, it is in your best interest to contact an experienced tax defense attorney. Together, you will lay out the pertinent facts of your case and agree on a strategy that keeps your personal and financial freedom top-of-mind.
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 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.
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