It may not be surprising to hear that people cheat on their taxes. Many U.S. citizens have attempted to save money by evading their tax obligations. However, tax evasion is a serious crime, and its perpetrators can face severe penalties.
For example, a woman in Newport News, VA was sentenced to prison and ordered to pay severe fines for tax evasion pertaining to her 2015 and 2016 income tax returns. Over $2.2 million was not properly reported. The culprit used fraudulent proceeds to fund their family home and other real estate investments.
If you are concerned about a potential issue regarding your federal income tax returns, get help seeking a resolution. Call our team of Dual Licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing by dialing (800) 681-1295 or clicking here to schedule a reduce rate initial consultation online.
Nosuk Kim is a 61-year-old woman from Newport News. She was formerly a licensed attorney, substitute judge, and member of her state bar’s disciplinary committee. During her professional career, she laundered millions of dollars through her attorney-trust account and through an unspecified entity in China. The fraudulent proceeds were used to fund her family home and other real estate investments.
Despite laundering this excessive amount of taxable income, Kim failed to properly report over $2.2 million on her federal income tax returns for 2015 and 2016. As a consequence of her tax evasion, the U.S. lost over $868,924 in tax revenue.
On January 25, 2023, Kim was sentenced to 52 months of jail time for her tax crimes. Furthermore, she must pay a $200,000 fine for evading proper assessment of her 2015 and 2016 federal income tax returns.
There is no civil statute of limitations for tax fraud. There is up to a six-year statute of limitations for tax crimes. This means that the Internal Revenue Service (IRS) has an indefinite amount of time to come after you civilly for your tax crimes. For example, you could be charged with tax crimes many years after a fraudulent act was committed. If you suspect you may have improperly reported income in the past, you can contact our Dual Licensed Tax Attorneys and CPAs for help determining the appropriate next steps.
A common way that people cheat on their taxes is by deliberately underreporting their personal or business income. Both legal and non-legal sources of income should be reported. That income should be reported even if someone has earned money through illicit activities.
Another common form of cheating on taxes involves phony deductions and credits. For example, someone may donate clothes to goodwill but severely overvalue the used goods they donated. Our Dual Licensed Tax Attorneys and CPAs can help those who have encountered issues with their tax credits and deductions.
Furthermore, citizens cheat on their taxes by failing to report tips they receive at work. Waiters, cab drivers, bartenders, caddies, and many other types of workers regularly receive gratuities. Those who receive tips at work should report them to their employers. Penalties may be imposed on people who fail to do so.
Lastly, hiding gambling winnings is another common example of how people cheat on their taxes. Winnings from casinos and other gambling institutions must be reported to the Internal Revenue Service (IRS). You can contact our law firm for help if you are worried that your gambling winnings have not been properly reported.
Cheating on your taxes is distinctly different from negligently filing them. The Internal Revenue Service (IRS) knows that filing your taxes is a complicated process, and they expect there to be occasional errors on peoples’ tax returns. In most cases, taxpayers who submit improper filings will be given the benefit of the doubt and will not be charged with tax fraud. There will often be fines (negligence penalty) for making a mistake on your tax return, but they are significantly less severe than the criminal penalties associated with tax fraud.
Tax fraud is defined as a willful act performed with the intent to defraud the IRS. For example, you may be charged with tax fraud if you use a fake social security number or claim a dependent while living alone.
Auditors are trained to look for signs of tax fraud, also referred to as “badges of fraud.” An example of a sign of tax fraud would be a business that keeps two sets of financial records or fails to keep any records at all or deals excessively in cash to avoid creating a paper trail surrounding their business. If an auditor suspects that tax fraud has occurred, they are required to notify the IRS’s Criminal Investigation Division (CID). You will not automatically be notified if an auditor has made a criminal tax fraud referral pertaining to your tax filings.
Unfortunately, in some cases, people are wrongfully investigated and charged with tax fraud. If you believe you are at risk of being investigated and charged for tax fraud, you can call our law firm for support and guidance. Our experienced Dual Licensed Criminal Tax Defense Attorneys and CPAs can help protect your interests, net worth, and your very liberty. We have nearly a perfect record of keeping our client’s out of jail when engaged early in the tax audit process or criminal tax investigation.
The amount of time people go to jail for tax evasion can differ from case to case. The primary consideration when determining sentences for tax evasion is the amount of tax loss your actions caused the government. Those who cause greater tax losses will generally face lengthier sentences.
However, several other factors can play a role in establishing sentences for tax crimes. For instance, a defendant's criminal history can play a role in determining how much prison time they will serve. Our Dual Licensed Criminal Tax Defense Attorneys and CPAs can help those who are at risk of being charged with tax evasion understand the potential consequences and keep matters civil wherever possible and thus ordinarily avoid criminal tax prosecution all together.
If you are concerned about an issue pertaining to your federal tax returns, seek assistance from our experienced Dual Licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing by dialing (800) 681-1295 or clicking here to schedule a reduce rate initial consultation online.
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.