The Department of Justice recently announced in a press release that an Iowa tax professional was recently sentenced to serve more than one year in federal prison for filing tax returns that he knew to be false and taking a portion of the fraudulently paid refunds for himself. Although this story primarily relates to the actions of a tax preparer, it highlights the consequences that taxpayers face when they intentionally break federal tax law. 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 examination by the IRS or state taxing authority, it is in your best interest to contact an experienced tax defense attorney to determine the best way to resolve your tax noncompliance. Even intentional criminal tax evasion can be corrected without the risk of criminal tax prosecution if you are willing to knock on the government’s door before they come knocking at yours!
Tax Preparer Stole Money from the IRS and His Clients, Convicted
Court documents reveal that David Miller, 52, of Iowa was the owner and operator of his own tax preparation business. Between 2011 and 2016, Miller admitted to preparing false tax returns for multiple clients. Additionally, Miller admitted to stealing portions of his clients’ tax refunds. Miller’s fraudulently prepared client tax returns resulted in an estimated tax loss of $125,954. Additionally, Miller’s theft from client tax refunds was not, but should have been reported as income on his individual tax return. Failure to report such amounts on his individual income tax return resulted in an additional loss to the government of $30,752.
Miller was sentenced to serve 12 months and one day in federal prison. Additionally, Miller was ordered to serve two years of supervised release upon the completion of his federal prison sentence. Finally, Miller agreed to pay approximately $156,000 in restitution to the IRS.
Fraudulent Refunds Can Spell Big Trouble for Taxpayers
Unfortunately, tax preparers that are willing to cheat for their clients are in high demand and often will have new clients lined up around the block that desire to pay less taxes. It is important to realize that it is not just the tax preparer that has exposure for tax fraud. Is saving money on your federal and state tax bill worth risking a jail sentence and the associated life altering consequences of criminal tax conviction.
Many taxpayers take the position that they are a small fish in a huge pond of other taxpayers. That false confidence can often play a part in a taxpayer’s decision to take positions on their tax returns that either lower tax liability or increase their federal refund. Common methods of obtaining a fraudulent refund or decreasing tax liability include underreporting income, overstating deductions, or claiming tax credits that are not appropriate. But what many taxpayers are unaware of is the technological advancements that have been made by the IRS in the past decade.
When a taxpayer’s individual or business tax return is filed, whether electronically or physically, the return is scanned and analyzed by complex computer systems. The system is intelligent enough to correct mathematical errors (both favorable and unfavorable to the taxpayer) and to detect potential “badges of fraud”. If enough fraud indicators are identified, the case will be referred to a revenue agent who will determine whether the case should be further referred to IRS Criminal Investigations (CI). If CI begins and investigation, they have a 90% + conviction rate.
The key to avoiding a criminal investigation or prosecution is to take care of any compliance issues before they escalate. If you have not yet received an examination notice, there may be time to correct the mistake by filing an amended return, making a quiet disclosure, or utilizing another compliance method such as a domestic or offshore voluntary disclosure. If you have already been contacted by the IRS, your experienced tax attorney will represent you in any and all of your government interactions to resolve your issue quickly and efficiently and keep the audit about money and not about criminal tax exposer to the greatest extent possible.
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.
In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client.
Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
- Guilty of tax obstruction by backdating documents?
- To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
- Help! The Document I Gave the IRS Had False Information
- Tax crime aiding or assisting false return IRC §7206(2)
- What is the crime known as tax obstruction § 7212?
- What is the difference between tax perjury and tax evasion?
- What is the tax crime commonly known as tax perjury?
- What is a Klein Conspiracy?
- Increased possibility of civil action in IRS investigation
- Am I Guilty of Tax Evasion if the Law is Vague?
- What happens if the IRS thinks I committed tax crimes?
- What are ways to defend against a tax evasion charge?
- Difference between criminal tax evasion and civil tax fraud
- What accounting method does the IRS use for tax fraud
- Can I Change Accounting Method to the Accrual Method
- What is the willfulness requirement for tax evasion?
- I didn’t know I committed tax fraud. Can I get off?
- Concealed assets from IRS. Can I avoid tax evasion charges
- How government proves I willfully engaged in tax evasion
- What is the venue or court where a tax crime case is heard?
- Must the IRS prove tax crimes beyond a reasonable doubt?
- Is it a crime to make false statements to the IRS?
- Will the IRS overlook my tax evasion if it’s minor?
- Failed to tell IRS about my nominee account
- Audit risk with cash based business transactions
- How to defend a client charged with tax evasion
- Is it tax evasion if I didn’t file income tax return?
- Government says I attempted to evade my taxes. Now what?
- I forgot to pay my taxes or estimated tax. Is this a crime?
- Government proof I “willfully” failed to pay taxes
- 5 Ways to Respond to Tax Evasion Charges
- Being audited after using a tax professional
- Rules for what an IRS agent can do while investigating me
- How tax preparers, attorneys and accountants are punished
- How the IRS selects tax crime lead for investigation
- How does the IRS prosecute suspected tax crimes?
- Does IRS reward informant leads for suspected tax crimes?
- How the government proves deficiency in a tax evasion case
- Do prior tax crimes factor into new IRS tax convictions?
- Requesting conference before investigative report is done
- Requesting conference after IRS Special Agent Report
- What are my rights during an IRS criminal investigation?
- Avoid prosecution for tax crime with voluntary disclosure?
- Defense tactics that make it hard for to prove willfulness
- How a tax attorney can stop your criminal tax case?
- What can you generally tell me about tax crimes?
- Continuing filing requirement with investigation pending
- Federal criminal code crimes that apply to tax issues
- Penalty for making, subscribing, and filing a false return
- CID special agent’s report for criminal prosecution
- What is the discovery process in a criminal tax case?
- What the IRS includes in indictment for tax case
- What is the hardest element of a tax crime to prove?
- IRS methods of gathering evidence to prove tax crime
- What does a grand jury do in IRS tax crime prosecution?
- Failure to keep records or supply information
- Failure to make a return, supply information, or pay tax
- What is attempting to evade payment of taxes?
- What is income tax evasion and how is it punished?
- What is attempted income tax evasion?
- What is the crime of failure to pay tax? What is punishment
- Crime of making or subscribing false return or document
- Criminal Investigation Division investigation tactics
- Tax crimes related to employment tax forms and trust funds
- Tactics to defend or mitigate IRS criminal tax charges
- How the IRS generates leads about suspected tax crimes
- What is the crime ”evasion of assessment” of tax?
- Specific examples of “attempting” to evade tax assessment
- What is the so-called Spies evasion doctrine?
- Does overstating deductions constitute tax evasion?
- Is it tax evasion if my W-4 contains false statements?
- IRC §7201 attempt to evade vs. common-law crime of attempt
- What are the penalties for Spies tax evasion?
- How government proves a taxpayer attempted tax fraud
- What is a tax that was “due and owing.”
- What is evasion of assessment for tax liability?
- Is evasion of assessment different from evasion of payment
- Does the IRS have a dollar threshold for tax fraud?
- What is the IRS burden of proof for tax fraud convictions?
- Are Tax Laws Constitutional?
- What is the source of law that defines tax evasion?
- Does section 7201 create two distinct criminal offenses?
- Does tax evasion definition include partnership LLC
- What if I helped someone else evade taxes?
- Is it illegal to overstate deductions on my tax return?
- Is it illegal to conceal bank accounts from the IRS?
- Do later losses justify prior deductions?
- Common reasons the IRS and DOJ start investigations
- What is the Mens Rea component of tax crimes?
- What is a proffer agreement and what are the risks?
- Why to have an attorney to review a proffer agreement
- Why enter into a proffer agreement?
- Limited use immunity from proffer agreements
- Difference between civil and criminal fraud allegations
