According to a Department of Justice press release, Loren Pulliam, a registered nurse from Pennsylvania, was indicted by a federal grand jury on five counts of tax evasion and four counts of failing to file a tax return and pay federal income tax. Prosecutors allege that between 2002 and 2005, Pulliam earned over $500,000 and earned $1.2 million between 2008 and 2016. During that time, the government alleges that Pulliam set up nominee entities and directed that payments be made directly to those entities instead of directly to her. Pulliam allegedly opened a bank account in the name of the nominee entity and used it to pay her personal expenses. The indictment also alleges that Pulliam failed to file a tax return and pay taxes from 2011 through 2014. This is a good example of a Spies Evasion fact pattern where misdemeanor non-filing can be ramped up to felony Income Tax Evasion.
Each year, hundreds of thousands of Americans decide to cheat on their taxes. Some taxpayers overstate their deductions, underreport their income, or both. On the other hand, there are some taxpayers that fail to file a tax return altogether. In either case, the general mindset of tax cheaters is “there are too many tax cheats in the United States and the IRS can only catch so many of them”. Although that statement is completely true, it also ignores the fact that when a taxpayer is caught cheating, the U.S. government will do everything that they can to bring down the hammer of justice onto that taxpayer.
Employers are required by law to send a copy of tax forms that were issued to employees to the IRS. For example: if a company pays a gardener $1,200 over the course of the year to maintain the company’s landscaping, they are required to issue the gardener a Form 1099 or W-2 for the payments. This legal obligation is true regardless of the method of payment. If the gardener attempts to underreport his or her income (or not report it at all), the IRS will likely be able to find out.
Recently, the IRS has made a major push to improve their technology. A large component of their improved tech includes computer systems that scan in all of the W-2’s, 1099’s and other tax forms sent in by employers (or others that have a filing obligation). The system then compares the received tax forms to the amounts included on taxpayers’ returns. If there are significant amounts of income that are not reported, an alert will be sent to an IRS technician who will investigate further. A similar process occurs for taxpayers with excessive or unusual deductions.
If you have been cheating on your taxes, there is a chance that you may get away with it this year. But if the IRS or state taxing authority identifies badges of fraud, an investigation and prosecution may not be close behind. Seeing as the IRS is underfunded, they typically take any opportunity that the can to recover lost tax revenue and make an example out of those who chat on their taxes. The good news is that there is a way to put the pin back in this grenade before it explodes through the use of a domestic or offshore voluntary disclosure.
Taxpayers that haven’t fulfilled their legal duty to timely file tax returns and pay the associated taxes should contact an experienced tax attorney as soon as possible. A tax defense attorney can help you get back on track. If you are the target of an IRS or state tax audit, a tax attorney can ensure that your rights are kept intact and that you only provide documents and statements required by law.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have assisted taxpayers in a myriad of situations and predicaments. Our team of zealous advocates is ready to help you develop and implement a sound tax strategy. Don’t let the fear of the IRS or state taxing authorities keep you up at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices in San Bernardino, Santa Barbara, Panorama City, and Oxnard! You can find information on all of our offices here.
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Here is a link to our practice overview video on warning signs that an audit has gone criminal.
What is an effective tax defense in an IRS eggshell tax audit?
https://www.youtube.com/watch?v=7qixPqWTtvA
So, you cheated on your taxes and you are under a tax audit…
https://www.youtube.com/watch?v=FZce4jqQJpI
Why should I hire a tax attorney to represent me in a tax audit?
https://www.youtube.com/watch?v=NDwc4GUfBX8
Foreign income and information non-compliance
https://www.youtube.com/watch?v=g2UlIE8oxPA
Self Help – Q and A libraries:
https://klasing-associates.com/topics/audit-representation-faq/
https://klasing-associates.com/topics/foreign-audit-faq/
https://klasing-associates.com/topics/ovdp/
https://klasing-associates.com/topics/criminal-tax-representation-faq/
https://klasing-associates.com/topics/employment-tax-representation-faq/
https://klasing-associates.com/topics/internet-online-business-tax-faq/
https://klasing-associates.com/topics/car-dealership-faq/
https://klasing-associates.com/topics/assisting-cpas-with-client-criminal-tax-exposure-faq/
https://klasing-associates.com/topics/non-filer-assistance-faq/
