Those who intentionally avoid their tax obligations can face severe consequences such as fines and prison time. The penalties assessed against a particular defendant can vary depending on an array of factors surrounding their case. Still, in general, those who cause greater tax loss to the government will face harsher punishment.
For instance, Melesio Gomez-Rivera, a construction company owner in Portland, Oregon, deliberately paid his workers under the table to avoid payroll and to assist his workers to avoid income taxes. He and his co-owners caused the government to miss out on approximately $68 million in tax revenue. For his actions, he is facing a prison sentence of 30 months and is ordered to pay a $30 million fine.
If you need help with your tax issues, contact our Dual-Licensed Tax Lawyers & CPAs at the Tax Law Offices of David W. Klasing by dialing (800) 681-1295 or clicking here to arrange a reduced rate initial consultation.
Oregon Business Owner Faces Serious Consequences for Tax Evasion
Melesio Gomez-Rivera is the owner of a construction company in Portland, Oregon. He was sentenced to 30 months in federal prison for evading payroll and income taxes for his workers. He was also ordered to pay the government nearly $30 million in fines.
Gomez-Rivera had conspired with a local check-cashing business to facilitate his fraudulent scheme. He cashed millions of dollars in payroll checks and used the funds for unreported wage payments. Afterward, he filed false returns to minimize his tax liability.
Along with his company’s co-owners, Gomez-Rivera cashed around $192 million in payroll checks, resulting in a combined tax loss of $68 million. In December of 2021, he and four others were charged with tax violations. Gomez-Rivera pleaded guilty in March 2023, and the trials of the remaining co-conspirators are scheduled to begin in December.
This case serves as another example of the potentially devastating consequences that may result from tax evasion charges. If you have been accused, or merely have exposure of facing a tax violation, then our Dual-Licensed Tax Lawyers & CPAs can help you avoid such penalties.
Factors Used to Determine Prison Sentences for Tax Evasion
Several factors are considered when determining prison sentences for tax evasion. These factors can vary depending on jurisdiction and specific circumstances, but some common factors include:
The Severity of the Offense
One of the primary factors used to determine prison sentences for tax evasion is the severity of the offense at issue. Details such as the duration of the evasion, the amount of taxes evaded, and the sophistication of the scheme may be taken into account when examining the severity of an offense.
Intent and Willfulness
Also, a defendant’s intent and willfulness will be analyzed to determine their prison sentence for tax evasion. In other words, the court will consider whether the tax evasion at issue was intentional or if it was merely a result of negligence or misunderstanding. Deliberate evasion is treated more severely.
Level of Cooperation
The level of a defendant’s cooperation is another factor that will be examined when calculating a prison sentence for tax crimes. Defendants who cooperate fully with authorities during their investigations may receive more lenient sentences. Cooperation can involve providing information about others involved in the scheme or assisting in the recovery of hidden assets.
Prior Criminal History
Your prior criminal history may be considered when assessing a prison sentence for a tax violation. If you have an extensive criminal record, then you may face harsher punishment. Prior convictions for any tax-related offenses will have an especially meaningful impact on your sentence.
Restitution and Financial Harm
The amount of tax owed and the financial harm caused to the government are also important considerations when determining a prison sentence for a tax evader. Many defendants are ordered to repay the taxes they owe as part of their sentence.
Plea Bargains
Furthermore, you may receive a lighter prison sentence for your tax crime if you enter into a plea bargain. A plea bargain is a negotiated agreement between the prosecution and the defendant in a criminal case. The defendant agrees to plead guilty or no contest to specific charges in exchange for concessions from the prosecution.
Accordingly, if you enter into a plea bargain, then you may receive a lighter prison sentence for your tax crimes. Support from our experienced team can be immensely valuable when considering whether to accept a plea bargain in your case.
Mitigating or Aggravating Factors
Finally, other factors such as remorse, employment history, family circumstances, and community involvement may also be considered to determine the appropriate sentence for a tax crime. Our legal team can help evaluate how such factors may be applied in your case.
Tax Avoidance vs. Tax Evasion
Tax avoidance and tax evasion are two distinct concepts. Tax avoidance is a legal practice that involves the use of legal strategies to minimize tax obligations. It refers to taking advantage of available deductions, exemptions, credits, and other provisions provided by the government. Tax avoidance is considered a legitimate and acceptable approach to tax planning and is regularly utilized by individuals and businesses who wish to optimize their tax position.
On the other hand, tax evasion is an illegal practice that involves intentionally evading taxes through various Illegal means. Common methods of tax evasion include intentionally underreporting income, maintaining unreported offshore accounts, submitting fake invoices or receipts, and improperly manipulating financial records. Tax evasion is treated as a serious offense and can result in criminal penalties like fines and imprisonment.
Therefore, the key distinction between tax avoidance and tax evasion lies in their legality. Tax avoidance refers to lawful ways of limiting taxes, while tax evasion involves illegal activities to evade tax obligations.
Contact Our Law Firm for Help with Your Tax Issues
After being accused of committing a tax violation, seek guidance from our Dual-Licensed Tax Lawyers & CPAs by calling the Tax Law Offices of David W. Klasing at (800) 681-1295.
Questions About Delinquent Payroll Taxes and Trust Fund Recovery Penalty
- What happens if an employer continues to incur new payroll tax liabilities?
- California Employment Taxes Basics
- How Does the IRS Develop an Employment Tax Fraud Case from the First Indication of Fraud to a Criminal Indictment?
- Can more than one person be considered responsible by IRS
- How unpaid employment tax payments are allocated
- When a corporate officer is considered a responsible party
- Examples of trust fund recovery penalty determinations
- Failing to pay employment taxes after notice is given
- How to determine responsible person for trust fund recovery
- Assessing trust fund recovery penalty and option to appeal
- What is the trust fund recovery penalty?
- What are the penalties for failure to pay employment taxes
- When am I considered liable for company’s employment taxes
