According to a Department of Justice press release, a tax professional from North Carolina was recently sentenced to serve nearly two years in federal prison after being convicted of conspiring to defraud the IRS. This story evidences the fact that even tax professionals can find themselves in hot water with the IRS and the Department of Justice and that fire can easily burn towards their clients. If you have filed tax returns that contain false or misleading information, or have failed to file a tax return for one or more years, it is in your best interest to contact an experienced tax defense attorney to determine your level of exposure and to develop a plan to come into compliance without facing criminal tax prosecution.
Defendant Falsely Claimed Tax Credits, Convicted
Court records reveal that Karen Marie Jones from Durham, North Carolina was sentenced to serve 22 months in a federal prison. Jones’ conviction was the result of her repeated efforts to defraud the United States. Jones worked as a tax return preparer, serving clients in North Carolina. As a part of that business, Jones prepared clients’ tax returns in a fraudulent manner to secure large refunds.
Jones and other co-conspirators took various steps to prepare false tax returns, including artificially lowering clients’ income so that they qualified for additional earned income tax credits. Additionally, Jones falsely claimed refundable education credits that her clients were not entitled to. As a part of Jones’ scheme, her clients were charged up to $3,000 for her services. The IRS and Department of Justice estimate that Jones’ illegal activity resulted in a tax loss of more than $1.2 million.
In addition to being sentenced to nearly two years in federal prison, Jones was ordered to serve three years of supervised release, commencing upon the completion of her physical incarceration. Additionally, Jones was ordered to pay $1.26m in restitution to the IRS, representing the tax loss that she caused.
Coming into Compliance After Getting Behind
The above story should remind taxpayers that whether you seek the services of a professional tax preparer or prepare your tax returns yourself, claiming tax benefits to which you are not entitled has serious repercussions. Recently, the IRS has made an open and notorious headcount increase, primarily in enforcement. The practical ramifications of the staffing increase are additional tax examinations and criminal tax investigations are on the near-term horizon.
If you have failed to file a tax return for one or more years, fallen behind on your payments, or have taken a position on your tax return that could not be supported upon an audit, eggshell audit, reverse egg shell audit or criminal tax investigation, it is in your best interest to consult with an experienced tax defense attorney to determine the best strategy to come into tax compliance. Together, you will work to establish the particular facts and circumstances of your case. Next, you will mutually agree on a path forward, keeping your physical and financial freedom top of mind. Throughout the entire process, you will never have to go up against the IRS alone, as your seasoned tax lawyer will represent you in all communications with tax authorities.
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!
We Are Here for You
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
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Questions and Answers on Unfiled Back Taxes
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Questions and Answers for Criminal Tax Representation
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- Help! The Document I Gave the IRS Had False Information
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