According to a Department of Justice press release, three family members from New York were indicted on tax evasion charges relating to the underreporting of their donut shop income. Both the IRS and state tax authorities keenly recognize the potential for tax evasion when a business transacts primarily in cash. If you have underreported income, especially cash basis income, inflated deductions, claimed credits that you are not entitled too, or have failed to file a tax return for one or more years, you should strongly consider seeking assistance from an experienced tax defense attorney.
Defendants Accused of Skimming Business Income
Court records reveal that John Zourdos, his wife, Helen Zourdos, and their son, Dimitrios Zourdos, all of Rome, New York, owned and operated three Dippin’ Donuts locations. Prosecutors allege that between 2013 and 2017, the trio of defendants deposited cash earned by their businesses into their personal bank accounts instead of the business’s bank account. Additionally, the defendants prepared books and records that were provided to their tax preparer that omitted the funds that were diverted to their personal bank accounts.
In addition to skimming cash from the business for personal use, the defendants are accused of employment tax fraud after paying their employees “under the table” using cash. Unsurprisingly, payroll taxes were not withheld from the cash paid to their employees. Tax authorities estimate that the tax loss caused by the defendants’ alleged illegal activity exceeded $1 million.
If convicted, the defendants each face five years in prison for the conspiracy charge, five years in prison for each tax evasion charge, and three years in prison for the charge of filing a false tax return. If the trio of defendants are convicted, they will likely also be ordered to serve a term of supervised release and pay restitution to the IRS representing the tax loss that they caused.
Getting Right with the Government and the Benefit of a Tax Lawyer
Cash skimming and paying employees with “off the books” cash is not a new concept to the IRS. In fact, the government has task forces of criminal investigators that focus on cash reporting by businesses. If you have failed to properly report income by omitting cash or any other item of income, it is in your best interest to work to rectify the situation before the IRS raises the issue at audit or as the result of a criminal investigation.
If you find yourself under audit or criminal tax investigation, an experienced Tax Defense Attorney will work with you to establish the facts of your case and help develop a roadmap to come into compliance. One of the best benefits of working with a Tax Lawyer is that you will never have to go up against the government alone, as you will be represented during any contact with the IRS or other governmental agency.
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 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!
We Are Here for You
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. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
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Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
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- Failure to keep records or supply information
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- IRC §7201 attempt to evade vs. common-law crime of attempt
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