According to a Department of Justice press release, a Michigan man was recently indicted for allegedly committing both tax and bankruptcy fraud. This story reminds taxpayers that positions taken on a tax return that seriously deviate from the truth can be criminally investigated by the IRS or state taxing authorities. Additionally, taxpayers should avoid making false statements to the IRS when confronted about potential tax noncompliance as lying to a federal agent is a felony in and of itself. If you have failed to file a tax return for one or more years, or have filed tax returns containing knowingly-false information, it is in your best interest to contact an experienced tax defense attorney to determine your exposure and the best way to come into tax compliance without facing criminal tax prosecution.
Court records indicate that Donald Stanley LaVigne, of Detroit, Michigan, was recently indicted on various criminal counts after allegedly failing to report substantial amounts of insurance commissions as a part of his annual individual tax return filings. The alleged tax return omissions occurred between 2013 and 2018. When the IRS identified LaVigne’s potentially criminal behavior and attempted to contact him, he provided false information to the Service asserting that the insurance commissions were not taxable income to him.
LaVigne filed for bankruptcy in 2018, but the Department of Justice alleges that he failed to identify the IRS as a creditor and that he failed to list his tax debt on the bankruptcy schedules listing all outstanding debt. Additionally, the Justice Department alleges that LaVigne provided false information as to his true income for 2016 and 2017 as part of his bankruptcy proceedings. When asked about 2017 federal income tax return, LaVigne is accused of having falsely indicated that his bankruptcy attorney had revenied his tax return and it was “correct and complete”, despite it allegedly being falsified.
If LaVigne is convicted, he faces up to three years in federal prison on each count of filing a false tax return, five years for each count of bankruptcy fraud, and five years in prison for the count related to making a false statement. Additionally, a conviction can carry a term of supervised release following physical incarceration. Lastly, those convicted of tax crimes are generally required to pay restitution to the IRS, representing the tax loss that they caused.
The defendant in this case is alleged to have dug himself into a deeper hole and instead of seeking assistance in getting himself out, dug even deeper. Making a mistake or fudging on a tax return is not uncommon. Whether simply a scrivener’s error or an intentional misrepresentation, the tax law provides avenues for taxpayers to work with tax defense lawyers and rectify their tax noncompliance and remove the risk of criminal tax prosecution as long is the taxpayer is willing to knock on the government’s door before the government knocks on the taxpayer’s door with an audit or criminal tax investigation. Taxpayers find themselves in ever increasing hot water with the IRS Criminal Investigations Division and the Department of Justice, Income Tax Division when they try to either hide their wrongdoing or double down on the untruthfulness originally contained in the tax returns being investigated. A similar fact pattern emerges when a taxpayer fails to file a tax return year-over-year.
If you have failed to file a tax return for one or more years or have taken a position on a filed tax return that could not be supported upon an audit, eggshell audit, reverse egg shell audit or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best options to get right with the government and remove the risk of criminal tax prosecution. Together, you will determine your level of civil and/or criminal tax exposure. Then, you will jointly decide on a strategy that will put your physical and financial freedom top of mind. While you are being represented by a seasoned tax defense attorney, you will not have to go up against the IRS alone.
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!
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