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New York Family Convicted of Tax Crimes After Under-Reporting Income, Faces Prison

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New York Family Convicted of Tax Crimes After Under-Reporting Income, Faces Prison


According to a Department of Justice press release, several members of a New York family were recently convicted on several criminal tax counts after lying about the true income of their businesses and paying employees under-the-table. This story should serve as a reminder to business owners that, while accepting cash as a method of payment for goods or services is completely legal, cash-based businesses pose a higher risk to the IRS and state taxing authorities from an income, sales, and payroll tax perspective. Thus, it should come as no surprise that such businesses are often the target of tax examinations, audits, eggshell audits and reverse eggshell audits and criminal tax investigations. If you have failed to file a tax return for one or more years, or have filed a tax return that did not include your true income, it is in your best interest to contact an experienced tax defense attorney to determine your potential exposure and to take the appropriate steps to bring you into tax compliance.

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.

Defendants Failed to Report Millions in Cash Receipts

Court documents reveal that John Zourdos, his wife Helen Zourdos, and their son Dimitrios Zourdos, all residents of New York, were the joint operators of three Dippin Donuts stores. Prosecutors alleged that between 2013 and 2017, the defendants underreported more than $2.8m in cash sales. This resulted in the underpayment of more than $650,000 of individual income taxes. To avoid the proper amount of income being reported, the defendants deposited cash from the business in various personal bank accounts. Employees were paid off-the-books, as well. Finally, prosecutors alleged that the defendants caused their tax preparers to file false individual and corporate income tax returns. The funds that would have otherwise been used to pay their true tax liability were instead used to support an extravagant lifestyle, including the purchase of luxury vehicles.

Defendants were charged with several counts of conspiracy to defraud the United States, tax evasion, and aiding and assisting in the filing of false corporate tax returns. Each defendant faces up to five years in prison for each count of conspiracy and tax evasion, and an additional three years in prison for each count of filing a false tax return. In addition to any term of physical imprisonment, the defendants will likely be ordered to serve a term of supervised release. Lastly, the defendants will likely be ordered to pay restitution to the IRS, representing the loss of tax dollars.

Getting Right with the Government After Falling Out of Compliance

As we indicated above, business owners who operate a cash-based business (or even a business that deals with significant amounts of cash) are at an increased risk of IRS or state tax audit and investigation. Tax authorities have multiple techniques to determine whether a business dealing with large amounts of cash has adequately reported cash revenues as a part of their annual tax reporting. Those who under-report the true income of their business could face civil or criminal repercussions.

If you have failed to file a tax return for one or more years or have filed a tax return that does not accurately reflect the true income of the business or individual, you should consult with an experienced tax defense attorney as soon as possible to determine the best way to get right with the government. Together, you and your seasoned Tax Attorney will work to identify your potential civil and/or criminal exposure. Then, you will jointly decide on next steps in an effort to bring you into tax compliance. All the while, you will not have to go up against the IRS or Department of Justice alone.

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!

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