According to a Department of Justice (DOJ) press release, defendant Louis Picardo, 64, an accountant and former tax collector for the city of Hoboken, pleaded guilty in June to tax evasion in U.S. District Court for the District of New Jersey. Picardo admitted to concealing close to $4 million of income from the IRS over a period of several years, thereby failing to pay over $914,000 in federal income tax liabilities. According to the criminal information (charging document) against Picardo, who belonged to several property management companies in addition to his accounting firm, the defendant “did willfully attempt to evade and defeat a substantial part of the personal income tax due and owing… by preparing and causing to be prepared, and by signing and causing to be signed, and by causing to be filed with the IRS false and fraudulent” tax returns, including returns for the years 2012 through 2015. According to anonymous sources, investigators turned their attention to Picardo during an investigation into his client, local politician Frank Raia, who is currently awaiting trial for vote-by-mail fraud – something which should ring alarm bells for any tax preparer or personal accountant whose clients may have criminal tax exposure.
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The information against Picardo alleged that the defendant repeatedly and deliberately underreported his income on federal tax returns, resulting in a significant underpayment of taxes, for tax years 2012 through 2015. The information provided the following dates and amounts, asserting that Picardo committed tax evasion in violation of 26 U.S. Code § 7201 (pertaining to attempts to evade or defeat tax):
In total, Picardo concealed taxable income amounting to $3,725,853, producing a total tax loss of $914,908 over a period of four tax years.
Picardo is currently scheduled to be sentenced in September 2019. At sentencing, he will face a prison term of up to five years, which is the statutory maximum established by 26 U.S. Code § 7201. Picardo also faces fines of up to $250,000, in addition to IRS restitution and the possibility of supervised release, which is similar to probation.
The underreporting of income is a telltale “red flag” for the IRS’ revenue agents. In fact, underreported income is listed among the many “indicators of fraud” provided by the Internal Revenue Service in IRM 25.1.2 (Recognizing and Developing Fraud), which lists the failure to “report or explain substantial amounts of income” as a badge of tax fraud under Section 126.96.36.199. If you have failed to report all of your taxable income, whether on your most recent tax return or on returns from tax years past, the safest course of action is to consult with an experienced attorney-CPA for personalized guidance on how to best resolve the issue.
At the Tax Law Office of David W. Klasing, we are IRS examination and tax evasion defense lawyers with over 20 years of experience helping taxpayers prepare for and navigate tax audits, achieve tax compliance, and avoid or mitigate civil and criminal fraud penalties. To discuss your tax question confidentially with an IRS tax lawyer in California, call our law offices at (800) 681-1295, or contact the Tax Law Office of David W. Klasing online to schedule a reduced-rate consultation.
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