According to a press release recently issued by the Department of Justice (DOJ), Manhattan-based tax attorney Harold Levine, 59, was sentenced to 24 months in prison after pleading guilty in June to tax evasion and obstruction of the Internal Revenue Service (IRS). Levine, against whom charges were filed in October 2016, failed to report over $3 million in income while managing transactions at the law firm Herrick Feinstein, from which Levine diverted funds with assistance from CPA Ronald Katz. Sentencing for Katz, who also pled guilty as a co-defendant in the case, is scheduled to take place this November.
DOJ records indicate that on October 11, U.S. District Judge Jed S. Rakoff sentenced Levine, who pled guilty to the charges earlier this year, to two years in prison. Both the tax evasion charges and obstruction charges arose from the same scheme, in which Levine directed millions of dollars in unreported income from tax shelters and other sources while practicing at Herrick Feinstein. The undisclosed income totaled more than $3 million over the period from 2005 to 2011. A total of approximately $1.2 million was concealed by Katz, who helped Levin execute the scheme.
Though charges were not filed against either man until 2016, the criminal scheme underlying the charges began as early as 2004, when Katz and Levine both began using a series of limited liability companies (LLCs) to quietly divert tax shelter fee income. According to the DOJ press release, “Most of the fee income Levine failed to report was routed by him through a limited liability company Levine controlled, which was nominally owned by a family member.”
Records indicate that Levine used the diverted funds to make extravagant purchases, including a Long Island property for a law firm employee that reportedly cost approximately $500,000. Funds for the purchase, which were misappropriated from Herrick Feinstein’s escrow account, were then diverted to a business partnership Levine and Katz co-owned. With assistance from Katz, Levine subsequently prepared federal income tax returns which improperly claimed rental property deductions, despite the fact that the home’s resident occupied the property rent-free for five years.
Not only did Levine fail to report the income to the IRS; further, he took deliberate steps to mask his actions not only by making false statements to auditors, but moreover “urging a witness to provide false testimony to the same IRS auditors who were investigating,” according to DOJ records.
“Harold Levine stole first from his law firm partners and then from American taxpayers by filing tax returns that left out millions of dollars of income,” said Joon H. Kim, Acting United States Attorney for the Southern District of New York. “As if tax evasion by a tax attorney were not bad enough,” his statement continued, “Levine tried to get out of it by lying to the IRS during an audit and urging a witness to give false testimony.”
In February 2013, IRS agents questioned Levine about the income that would later lead to his conviction. As Kim noted, Levine made false statements when asked about his financial activities. For instance, when questioned about the Long Island property’s classification as a “rental” property, Levine told IRS agents that its tenant, who was in fact living rent-free, paid $1,000 per month in rent. When the IRS contacted the property’s resident for clarification, the resident was “urged” by Levine to corroborate the false claims.
As Kim quite correctly pointed out, “Levine’s jail sentence should serve as a reminder that everyone – including tax lawyers – must be truthful in reporting their income, and deal honestly with, the tax authorities.” If you have any questions or concerns regarding compliance with income reporting requirements for foreign and/or domestic income, the best and safest course of action is to discuss the matter immediately with an experienced tax attorney serving San Bernardino.
The knowledgeable team of California, Tax Attorneys, CPAs and EAs at the Tax Law Offices of David W. Klasing has extensive experience assisting taxpayers with income tax return preparation, compliance with the Foreign Account Tax Compliance Act (FATCA), the Offshore Voluntary Disclosure Program (OVDP), Streamlined Offshore Voluntary Disclosure, Domestic Voluntary Disclosure Program and other matters pertaining to tax evasion and income disclosure requirements. Whether you are worried about a previous failure to report income or pay taxes, require assistance from a San Bernardino IRS tax audit attorney, or are simply interested in identifying strategies to minimize your tax liability in the future, our zealous accounting professionals can help you comply with the U.S. Tax Code while upholding your rights and protecting your best interests. For a reduced-rate consultation, contact the Tax Law Offices of David W. Klasing at (800) 681-1295 today.
Watch some of our Tax Law YouTube Videos:
Criminal Tax Evasion
Warning signs an audit has gone criminal
What is an eggshell tax audit?
What is an effective tax defense in an IRS eggshell tax audit?
So you cheated on your taxes and you are under a tax audit
Why should I hire a tax attorney to represent me in a tax audit?
What are common tax issues that non filers face
IRS appeals representation
Basics of Federal Tax Litigation
Common issues when facing a sales tax audit
Common issues with IRS collection actions
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices in San Bernardino, Santa Barbara, Panorama City, and Oxnard! You can find information on all of our offices here.