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According to a Department of Justice press release, a New York businessman recently pleaded guilty to tax evasion after omitting large amounts of income from his yearly tax filings. This story should serve as a warning to taxpayers who have failed to include their full income on their tax returns or who have overstated deductions, credits, or other favorable tax items in order to reduce their tax bill. If you have taken such a position on a federal or state tax return in the past or have failed to file a tax return as required by law, it is in your best interest to contact an experienced tax defense attorney to get right with the government.
Court records reveal that Irwin Jacobs, 68, was a 50 percent owner of J K Apparel Sales Co. Inc. and S&I Sales Co. Inc. Jacobs’ companies were based in New York City and served as the exclusive U.S. representatives for Prestige Global Co. Ltd., a Taiwanese clothing company. Jacobs admitted that between 2006 and 2014, he received large swaths of income from his companies but failed to report most of that income on his individual tax returns.
In addition to underreporting income on his tax returns related to cash that he received, he also failed to include the funds that were used by his companies to pay his personal expenses. Jacobs admitted that he directed his companies to pay for more than $4.4 million in personal expenses. Additionally, he used the corporate sales credit card to pay for more than $200,000 in personal expenses.
Altogether, the IRS estimates that Jacobs’ illegal actions caused a tax loss to the IRS of more than $1.3 million. A sentencing hearing has been scheduled for April of 2021. At that time, Jacobs faces up to five years in federal prison, a period of supervised release, and an order to pay restitution to the IRS.
The story above is an all-to-common narrative that plays out in courtrooms across America every week. Individuals under-report their income or artificially inflate business deductions or credits to lower their tax liability. Unfortunately for them, the story generally does not end well. As we indicated above, a taxpayer who willfully evades the payment of taxes can be sentenced to up to five years in prison for each instance of tax evasion. It is imperative that taxpayers who have taken steps to illegally lower their taxes work to rectify the situation before the IRS and Department of Justice escalate the situation.
The good news is that a tax defense attorney has the experience and the tools needed to help you come into tax compliance. Working with your tax lawyer, you will establish the pertinent facts of your case and come to an agreement as to the best strategy to move forward. Your experienced tax attorney will effectuate and execute your plan and will represent you in any dialogue with the IRS or state taxing authorities.
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!
Regardless of your 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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