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North Carolina Man Sentenced on Conspiracy Charges Related to Tax Scheme

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    According to a Department of Justice press release, Joseph Gerard, III, of Charlotte, North Carolina, was sentenced to serve nearly four years in federal prison for conspiracy. Gerard assisted clients hide money from the IRS and further assisted in their endeavors to avoid paying federal income tax on large sums of income. This story is a testament to the notion that when a taxpayer is seeking advice on tax strategy or optimization, they should consult a professional that is not only going to work tirelessly to get the best possible results for their client, but also work within the bounds of the law.

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    Businessman Helped Client Cheat Taxes, Sentenced to Prison

    Court documents revealed that Gerard conspired with a client between late 2007 and mid-2016 to hide income from the IRS. Federal authorities estimated that Gerard assisted in the concealment of more than $2.7 million in gross receipts from his medical client’s business.

    Prosecutors alleged that Gerard funneled his client’s income through various layers of bank accounts and “straw companies”, entities established and utilized to facilitate sham transactions and hide the true identities of the parties involved. Although it was Gerard’s client’s desire to avoid paying taxes, Gerard developed the plan, caused his client to establish the straw entities in various states, and even hired an acquaintance to act as a representative on his client’s bank accounts.

    Come tax time, Gerard assisted his client with the filing of false tax returns that inflated withheld taxes. Additionally, Gerard created and filed false liens against his client’s property to give the appearance to the IRS that there was no equity in the client’s property, for collection purposes.

    Government officials estimate that Gerard was responsible for a tax loss of more than $560,000. In addition to the 46-month term of imprisonment, Gerard was also sentenced to serve three years of supervised release commencing at the conclusion of his physical incarceration. Finally, Gerard was ordered to pay restitution in the amount of $567,665 to the IRS.


    Tax Planning vs. Tax Crimes

    The takeaway of the story above is twofold. First, it is critical to differentiate between tax planning and devising an illegal tax scheme. Working with an experienced tax attorney to come up with legal methods to reduce federal, state, and local tax liability is a worthwhile endeavor. There are often various opportunities to reduce and sometimes eliminate certain tax liabilities by developing and implementing a legal tax reduction strategy. On the other hand, hiding income, using straw companies, establishing nominee bank accounts, and various other acts that are undertaken with the intent to untruthfully lower or evade tax liabilities are illegal.

    On occasion, taxpayers will find themselves out of tax compliance, be it because they intentionally disregarded the tax rules or because they simply did not understand that what they were doing was wrong. In those instances, an experienced tax defense attorney is an indispensable ally. Your tax defense lawyer will work with you to establish the facts surrounding your case and help develop a strategy to get you into compliance and minimize the effects that ordinarily accompany unintentional tax noncompliance and even outright illegal tax evasion.  Even outright tax evasion can be mitigated if you get to the IRS before they get to you!


    Contact an Experienced Tax Attorney Today

    The tax and accounting professionals at the Tax Law Offices of David W. Klasing have worked with business owners of companies ranging in size from mom and pop to middle market. If you have a history of cheating on your income taxes and find yourself under audit with a state or federal taxing authority, we can help! If you have received notice from the IRS or state taxing authorities that your payroll tax withholding, accounting, and remittance procedures are being scrutinized, our team of zealous advocates will help you develop a legal strategy aimed at preserving the integrity of you and your business. Do not let the threat of a criminal tax investigation or prosecution keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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