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New Jersey Business Owner Pleads Guilty to Cash Skimming

The Consequences of Tax Fraud and Non-Filing in Los Angeles

Although the IRS and Department of Justice have publicly stated that they have reduced their tax enforcement, investigation, and prosecutorial operations in the wake of the COVID-19 pandemic, they still remain active in pursuing criminal tax cases. Taxpayers with unfiled tax returns or those who have taken a position on a tax return that is fraudulent should use this enforcement lull to come into compliance with state and federal tax laws by consulting with an experienced tax defense attorney.

Bar and Restaurant Owner Skimmed Business Funds

According to media reports, Coby Frier, 53, from Atlantic City, pleaded guilty to one count of tax evasion by videoconference last week. Prosecutors alleged that Frier was the owner of several businesses in New Jersey, including bars, restaurants, and clubs. Between 2012 and 2015, Frier skimmed cash from his businesses and routed the money directly into his personal bank account.

Investigators discovered that Frier intentionally kept his bank deposits under $10,000 in order to avoid the bank having to report the transaction. The funds were used to put down payments on luxury vehicles and fund other extravagant expenditures.

Frier did not pay income tax on the skimmed cash, nor did he file tax returns or pay tax on an annual basis. He will be sentenced in the fall and faces a maximum penalty of five years in prison. He will likely also be ordered to pay restitution and serve a period of supervised release.

Cash Skimming and IRS Criminal Investigations

Cash skimming can best be described as siphoning a portion of a business’s gross receipts. The practical effect is a reduced tax base upon which the business is taxed. Additionally, a taxpayer generally does not include the skimmed amounts in their individual gross income for the year. Thus, the amount of skimmed cash goes 100% tax-free. The IRS and state tax authorities obviously work hard to weed out those engaged in skimming operations.

The IRS Criminal Investigations team or investigators from state taxing authorities will often observe a business and determine the number of gross receipts that are received in a given period (for example, a week) and extrapolate the expected revenue for a particular reporting period (for example, a quarter). If the amounts vary significantly, a more in-depth investigation is warranted.

Coming into Tax Compliance

If you have engaged in cash skimming, have failed to file tax returns for one or more years, or have taken any other position on a tax return that is not supportable, it is in your best interest to contact an experienced tax attorney today. During the COVID-19 pandemic, the IRS and Department of Justice have slowed their pace of examinations, investigations, and prosecutions. This gives taxpayers a golden opportunity to meet with a tax lawyer, develop a plan to come into compliance, and execute it.

Note:  As long as a taxpayer that has willfully committed tax crimes (potentially including cash skimming) 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 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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We Are Here for You

Regardless of your business or individual tax 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.

In addition to our main office in Irvine,  the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.

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