According to a Department of Justice press release, David Castle, a 76 year-old businessman from Albuquerque, New Mexico, pleaded guilty to one count of tax evasion. This story is a testament to the fact that steps that taxpayers take in an attempt to cleverly work around the IRS or state taxing authorities could actually be illegal. If you have engaged in any of these practices or are under examination or criminal investigation by the IRS or a state taxing authority, it is in your best interest to contact an experienced tax defense attorney as soon as possible.
Per court documents, Castle was the owner/operator of the Gold and Silver Exchange (GSE). GSE was an Albuquerque business that sold, purchased, and repaired jewelry. Castle was originally indicted in February of last year and was charged with the obstruction of the administration of the internal revenue laws and tax evasion.
The obstruction charges stemmed from the way that Castle did business at GSE. According to the IRS and Department of Justice prosecutors, from 2004 through 2018, Castle set up bank accounts that were owned by nominee businesses and concealed personal income and expenditures using such accounts. Additionally, Castle engaged in cash transactions, both relating to personal transactions and in the payment of employees of GSE. The Department of Justice contended that all of these activities were performed with the sole intention of frustrating the efforts of the IRS to collect tax. Evasion of payment is a felony in and of itself.
The second count of the indictment involved Castle’s attempt to avoid payment of over $100,000 in taxes that were owed relating to tax years from the 1990’s through the first few years of the 2000’s. The indictment alleged that Castle obscured the location of his funds through the use of various bank accounts in an effort to evade the payment of the tax that he owed.
Earlier this month, Castle pleaded guilty with regard to the count of tax evasion. At his sentencing hearing later this year, Castle will face up to five years in a federal prison, as well as a period of supervised release. Finally, Castle will likely be required to pay a fine and restitution to the IRS for the taxes that he skipped out on.
Many taxpayers believe that they can lawfully play games with the way that they operate their business in an effort to reduce the amount of taxes that they owe. In other situations, taxpayers organize their affairs in a manner that is impossible to track with the thought that “the IRS cannot prove that I did anything wrong”. This line of thinking is dangerous because it is grounded in an erroneous interpretation of the law. Taxpayers bear the burden of proving everything that they allege on a tax return. For instance, if you take a deduction for paying an employee a salary, you have the burden of proving that the employee was paid said salary. The IRS does not have the burden of proving you wrong.
If you find yourself receiving a notice from the IRS or state taxing authority that you have been selected for an examination of your individual or business tax return, it is in your best interest to contact a tax defense attorney as soon as possible. A seasoned tax lawyer will work with you and act as a buffer between you and the IRS or state taxing authority.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience working with taxpayers from all walks of life. Whether your situation involves a federal or state individual tax audit or you are the owner of a business that is being investigated for employee misclassification, our team of zealous advocates are standing by to assist you. Do not let the threat of an IRS or state tax investigation keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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