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According to a Department of Justice press release, a New Jersey man was recently indicted for his role in a scheme that resulted in the IRS issuing more than $3 million of fraudulent refunds. The key takeaway from this story is that if you have taken a position on your tax return that you know is not supportable or believe that a previous reduction in tax or refund is too good to be true, it is in your best interest to consult with an experienced tax defense attorney to determine the proper steps to protect yourself from potential civil and criminal penalties.
Court documents reveal that John W. Barry, Jr conspired with other individuals from Virginia and New York to develop a scheme aimed at cheating the IRS out of large tax refunds that were obtained in a fraudulent manner. Investigators and prosecutors allege that Barry and his co-conspirators marketed their fraudulent refund scam to taxpayers by promising that the IRS would pay off a portion of their mortgage after filing only a few forms with the Service. Those forms were tax returns claiming refunds for taxes that were claimed to have been withheld, but never were. Upon receipt of the refund, Barry and his associates are alleged to have taken a portion (generally 25 to 30 percent) as a fee.
When the IRS discovered the fraudulent refund scam, Barry took additional steps to cover up his wrongdoing. First, Barry provided his clients with false tax documentation to send to the IRS to impede their investigative efforts. Next, Barry urged clients to drain their bank accounts to thwart IRS collection efforts. Lastly, Barry took steps to distance himself from the taxpayers who were being contacted by the IRS.
The indictment returned against Barry includes charges of conspiracy, the filing of false tax returns, obstructing the internal revenue laws, and an additional count of failing to file his own individual tax return in 2016. If convicted, Barry could face more than a decade in federal prison.
Although this story revolves around a group of co-conspirators who attempted to take taxpayers for a ride, the resulting investigation and criminal prosecution could happen to anybody. If you have taken a position on a tax return that, upon examination by the IRS, could not be supported, or if you have failed to file a tax return altogether, you are likewise at risk. Many taxpayers believe that the underreporting of income, overstating of deductions, or missing a year or two of tax returns is behavior that will fly under the radar of the IRS. To the contrary, the IRS has sophisticated data analytics programs that are aimed at catching those who have been untruthful on their tax returns.
Contacting an experienced tax defense attorney can be extremely beneficial to a taxpayer who has a large outstanding tax liability, has not filed one or more years of tax returns, or has underreported income or overstated deductions. Working with your tax defense lawyer, you will establish the facts and circumstances of your case and develop a roadmap to come into compliance with an aim to minimize the potentially devastating consequences of an IRS investigation or criminal tax prosecution.
Note: As long as a taxpayer that has willfully committed tax crimes 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 particular 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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