Many of the stories that we cover involve taxpayers who have been indicted or convicted of charges involving tax evasion and conspiracy to defraud the federal government. But there is another equally important category of criminal charges that are often brought against taxpayers: failure to file. It may surprise our readers to learn that many of those who are charged with and eventually convicted of failing to file their tax returns are those who are able to pay the tax liability, but for one reason or another, choose not to.
According to the Department of Justice, Sandra Vonderembse, a Ohio psychiatrist, failed to file her federal tax returns for tax years 2009 through 2011, even though she was earning an income of nearly $250,000, annually. To compound her troubles, she failed to pay her tax liabilities that were incurred dating back to 2005. In some of the tax years, Vonderembse “paid” her tax liabilities in fictitious financial instruments.
Vonderembse’s guilty plea also included her admission that throughout the period that she failed to file her return, she directed payments that were made to her into nominee entities in an attempt to avoid detection by the IRS and other taxing authorities. She can be sentenced to up to five years in prison for the tax evasion charge and will almost certainly be sentenced to an additional supervised release after her federal prison sentence is served. Vonderembse also agreed to pay restitution to the IRS in the amount of $565,000. She will likely be ordered to pay additional fines and penalties.
It is important to note that the case above involves both tax evasion and failure to file. Not every taxpayer who fails to file a tax return will be charged with tax evasion. Vonderembse’s actions relating to using nominee entities in an attempt to hide money from the IRS is likely a big factor that was considered in the evasion charge. Readers will note that Vonderembse did not plead guilty to a failure to file charge. That could be because the DOJ agreed to dismiss the failure to file charge if she pled to the tax evasion charge.
This case brings up an important point about those who haven’t filed their tax returns as required by law. The longer that a taxpayer waits to clear up their tax filing requirements, the more severe the consequences become. Taxpayers who have failed to file their tax returns should contact an experienced tax attorney as soon as possible to evaluate their options.
In some cases, getting current with your filing obligations can be as easy as filing the tax returns for the years that are missing. If a large amount of tax is owed for prior years or the number of years of non-filing is extensive, some strategic planning may be required to reduce the amount of taxpayer exposure. But one thing is for sure: waiting around for the IRS or Department of Justice to come after you for failing to file your taxes is not a good idea. When the government has to track you down in order to get you to file a tax return, they will likely come at you with everything that they’ve got. A tax attorney can help you evaluate your options and help you make the most informed decision about how to proceed with your particular situation.
A tax attorney is unique in that they bring experience in realms of criminal tax procedure, Constitutional law, evidence, and negotiations, in addition to an extensive tax knowledge base. Regardless of whether you are looking to get current with your taxes or you are in the middle of litigation for failing to file, an experienced tax attorney can provide valuable assistance and give you your best shot at walking away from the situation with minimal financial or criminal repercussions.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have experience in representing taxpayers in a plethora of tax dilemmas. Whether you are looking to file taxes for years that you have failed to file or are being examined or investigated for another tax issue, our tax team is ready to zealously advocate for your best interests. Don’t lose sleep over the potential of spending time in a federal prison for failing to file your taxes. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
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