According to a Department of Justice press release, a New York business owner was recently indicted on multiple felony tax counts related to filing a false tax return after allegedly failing to report his business’s full amount of income for multiple years. This story should serve as a reminder to our readers that while there are multiple legal and justifiable tax planning techniques that can be employed to reduce your business or individual tax bill, simply fraudulently underreporting taxable income is not one of them. 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 substantiated upon examination, it is in your best interest to contact an experienced tax defense attorney to determine the next steps you should take to bring yourself into tax compliance while minimizing civil penalties and avoiding criminal tax prosecution.
Court documents reveal that Pawel Bartoszek, of Lake Grove, New York, was the owner and operator of Mega State Inc., a construction company serving customers in New York. Federal prosecutors allege that, between 2015 and 2017, Bartoszek caused approximately $6 million in business checks payable to Mega State to be cashed at a local check-cashing business, instead of being deposited into Mega State’s business bank account. Prosecutors further allege that Bartoszek did not report the same $6 million to his tax preparer. The result is an alleged underreporting of gross receipts, business income, and Bartoszek’s individual taxable income. As a result, Bartoszek is charged with filing a false tax return for both himself and Mega State for 2015 through 2017.
If Bartoszek is convicted, he faces up to three years in prison for each of the six counts of filing a false tax return. Additionally, Bartoszek could be sentenced to a period of supervised release commencing upon the completion of any physical incarceration. Lastly, Bartoszek could be ordered to pay restitution to the IRS, representing the amount of the tax loss caused.
The strategy allegedly used by the defendant detailed in the story above is an example of tax planning that is not advisable. The civil and criminal penalties that are associated with fraudulently underreporting income, inflating deductions, or failing to file a tax return always outweigh the potential gains that are being sought. With advances in IRS data analytics technology, it is easier than ever for the government to identify and initiate a civil examination, eggshell audit, reverse eggshell audit or a criminal tax investigation for those taxpayers who they believe may have willfully violated federal tax laws.
If you have failed to file a tax return for one or more years, or have taken a position on a filed tax return that does not reflect your true amount of income, you should strongly consider consulting with an experienced tax defense attorney to determine the best strategy to bring you into tax compliance. Together, you will work to establish the pertinent facts of your case. Then, you will jointly agree on a path forward, moving toward tax compliance while attempting to reduce potential civil and avoiding criminal tax penalties.
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.
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.
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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 upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
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!