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Owner of Temporary Employment Agency Admits Guilt in Massachusetts Tax Fraud Case

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    Tax evasion refers to using deceptive practices to willfully escape one’s tax obligations. Tax evasion schemes can arise in several different forms. For perpetrators of these schemes, the repercussions can be quite severe.

    For instance, the former owner of a temporary employment agency in Massachusetts is now facing significant fines and potential prison time for their role in a tax evasion scheme. The charges stem from Dam Ngoc Luong’s deliberate failure to report millions of dollars of income to the Internal Revenue Service (IRS). If you are faced with a tax issue, you must seek guidance from our experienced legal professionals. We will fight to have your penalties eliminated or reduced.

    Get help from our Dual-Licensed Tax Lawyers & CPAs by calling the Tax Law Offices of David W. Klasing today at (800) 681-1295 or by clicking here to schedule a reduced rate initial consultation.

    The Case Against Dam Ngoc Luong

    In a significant legal development, Dam Ngoc Luong, a resident of Dorchester, Massachusetts, has admitted guilt in a federal court in Boston. Her plea, entered on April 18, 2023, relates to a series of tax and fraud offenses associated with her management of a temporary employment agency. The sentencing hearing for this case is scheduled for July 13, 2023.

    Operation of Four Seasons Temp, Inc.

    Dam Ngoc Luong was the owner and operator of Four Seasons Temp, Inc., a temporary employment agency specializing in providing temporary personnel to various client businesses. These agencies are entrusted with essential responsibilities, including managing employee payroll, ensuring the collection and payment of employee payroll taxes, and maintaining workers’ compensation insurance for their employees.

    Unlawful Financial Practices

    During her tenure as the agency’s owner from 2015 through 2019, Luong adopted an unlawful financial practice. Instead of depositing funds from client checks into her business account, she primarily cashed these checks. Consequently, Luong only reported the amounts deposited into the business account on her annual corporate tax returns, deliberately failing to disclose more than $14 million in company income to the IRS.

    Furthermore, as she structured Four Seasons as an S-corporation, the net business income and expenses were reported on her personal Form 1040 tax returns. This maneuver resulted in Luong failing to report over $3 million in pass-through income and neglecting to pay $885,000 in personal income taxes.

    Tax Evasion and Employee Wage Issues

    In addition to her financial mismanagement, Luong neglected her legal obligation to withhold taxes from employee wages. Contrary to this obligation, she paid more than $12 million in employee wages in cash, bypassing tax withholdings and failing to remit more than $3 million in employment taxes to the IRS.

    Insurance Fraud

    Further complicating matters, Luong engaged in insurance fraud by concealing the cash wages disbursed to her employees when dealing with the insurance carrier responsible for workers’ compensation coverage. This deception enabled her to pay lower workers’ compensation insurance premiums, defrauding the insurance carrier of $155,000 in premiums she should have paid.

    Charges and Potential Penalties

    Luong faces multiple charges, including filing false tax returns, which carry a potential sentence of up to three years in prison, one year of supervised release, a $250,000 fine, and restitution to the IRS. Additionally, the charges of failure to collect and pay over employee taxes each provide for a sentence of up to five years in prison, three years of supervised release, a $250,000 fine, and restitution to the IRS. The most serious charge, mail fraud, could result in a sentence of up to 20 years in prison, three years of supervised release, and a fine of up to $250,000. Sentencing will be determined by a federal district court judge based on relevant sentencing guidelines and statutory provisions.

    If you have a tax issue and are concerned that you may face penalties similar to those levied against Luong, then our Dual-Licensed Tax Lawyers & CPAs can help. We will identify the appropriate course of action. Also, we will handle all communications with the IRS and ensure that your interests are preserved.

    Potential Defenses to Tax Evasion Charges

    Dealing with charges of tax evasion can be a stressful experience. There are several defenses that accused taxpayers may utilize. For example, the following are all arguments that our legal team may employ in your case:

    Lack of Intent

    In tax evasion cases, one common defense is to assert a lack of intent to evade taxes. This defense argues that the accused did not willfully or knowingly engage in activities to evade taxes but made errors or omissions unknowingly.

    Mistaken Interpretation of Tax Law

    Taxpayers may defend themselves by claiming that they made errors based on a mistaken interpretation of tax laws. They argue that they genuinely believed their actions were legal under the tax code.

    Insufficient Evidence

    This defense asserts that the prosecution lacks sufficient evidence to prove tax evasion beyond a reasonable doubt. It challenges the accuracy or completeness of the evidence presented.

    Reliance on Professional Advice

    Taxpayers can claim they relied on professional advice from accountants, tax preparers, or legal experts and thus were unaware of any wrongdoing. This defense highlights the importance of the advice received.

    Voluntary Disclosure

    Voluntary disclosure involves a taxpayer admitting their tax evasion voluntarily before being audited or investigated by tax authorities.

    If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.

    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 disclosure before 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 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!

    Statute of Limitations

    Tax evasion cases must be initiated within a specific timeframe because of statutes of limitations. This defense argues that the prosecution filed charges after the legally allowable time has passed.

    Lack of Willfulness

    A defense based on the lack of willfulness asserts that the taxpayer’s actions were not intentional but the result of negligence or inadvertent mistakes, which do not constitute tax evasion.

    Contact Our Team for Help Resolving Any Tax Issues You May Face

    If you need help resolving a tax-related legal issue, get in touch with our Dual-Licensed Tax Lawyers & CPAs at the Tax Law Offices of David W. Klasing by dialing (800) 681-1295.

    We Are Here for You

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