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New Jersey Business Owner Charged with Tax Evasion and Filing a False Tax Return

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    According to a Department of Justice press release, a New Jersey owner was recently charged with tax evasion and filing a false tax return after allegedly failing to report substantial amounts of taxable income on his individual tax returns. For those taxpayers who have also failed to live up to their tax compliance obligations, this story should serve as a reminder that the IRS has committed to stepping up in their efforts to uncover and prosecute tax crimes. If you have failed to file a tax return for one or more years, or have memorialized inaccuracies on your tax return, such as underreporting income, overstating deductions, or claiming fraudulent tax credits, it is in your best interest to contact an experienced tax defense attorney to discuss your options to come into tax compliance.

    Defendant Allegedly Paid for His Own Expenses Using Business Funds

    Court records reveal that Gabriel Ferrari of Linden, New Jersey, was the owner and operator of Buses and Trucks Inc. Between 2011 and 2014, Ferrari allegedly used the gross receipts of his business to pay for his own personal expenses. Federal prosecutors believe that Ferrari also used a substantial amount of Buses and Trucks Inc.’s gross receipts to pay for Ferrari’s horse racing activities. IRS Criminal Investigations and the Department of Justice assert that Ferrari did not report any of the Buses and Trucks funds used to pay for his benefit on his individual income tax return.

    If Ferrari is convicted, he faces up to five years in federal prison on the tax evasion counts and up to three years for each count of filing a false tax return. If convicted, Ferrari will also likely be sentenced to serve a term of supervised release upon the completion of his federal prison sentence. Lastly, he will likely be required to pay back lost tax revenue to the IRS in the form of restitution.

    Coming into Compliance After Commingling Business and Personal Assets

    Many business owners believe that they can freely use funds of their business to pay for their personal expenses. And although the temptation is there, it is important to understand the tax consequences of doing so. First and foremost, an individual who has their expenses paid for by a business that they own is generally required to take such payments into account when calculating their gross income. Additionally, a business is generally not permitted to take a deduction for amounts paid relating to the expenses of their owner that do not have any relation to the business. Failure to comply with either aspect of the tax law can result in serious consequences, up to and including a federal prison sentence.

    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 with substantiation upon an IRS or state tax audit, it is in your best interest to consult with an experienced tax defense attorney to strategize about your next best move. The IRS has hired hundreds of new revenue agents who will be chiefly responsible for conducting taxpayer examinations and uncovering instances of tax fraud. Getting right with the government before they audit your tax return generally yields the best results and your seasoned tax lawyer will ensure that you are fairly and effectively represented during every step of the process.

    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 disclosure before 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, Kovel CPAs 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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