No law forbids a U.S. taxpayer from paying the lowest possible amount in income taxes. However, a taxpayer that purposely pays
less than is legally required may be civilly and criminally prosecuted for tax evasion — and IRS prosecutions are on the rise.
Here are a few of the most recent indictments and convictions for domestic and offshore tax evasion resulting from IRS criminal investigations:
I. Georgia Dentist Intentionally Underreports Income by More Than $500,000
On February 6th, Dr. Dayo Obebe, a licensed dentist practicing in Columbus Georgia, pled guilty to one count of tax evasion after an IRS audit and criminal investigation. From 2004 to 2006, Obebe concealed over $500,000 in payments made to him via credit cards from his accountants and the IRS by depositing said payments into a separate account from cash and check payments.
The IRS began criminally investigating Obebe as a result of an audit the IRS performed in 2008 where Obebe lied about the amount of income he earned between 2004 and 2006. Overall, Obebe evaded in excess of $185,000 in tax by underreporting his total income.
Even though Obebe pled guilty, he still faces a maximum potential sentence of five years in prison, three years of supervised release, restitution charges in the amount of $189,661, and penalty charges in the amount of $250,000 at his sentencing hearing.
II. Berkeley Psychologist Omits Private Practice Income From Tax Returns
Last Tuesday, February 4th, a federal jury convicted former Stanford professor and clinical psychotherapist Hugh Leslie Baras on five counts of tax evasion as a result of a criminal investigation by the Internal Revenue Service (IRS). From 2005 to 2009, Baras omitted all $1.2 million of income he earned through his private practice in Palo Alto on his income tax returns. Thus, evading over $375,000 in taxes.
Baras is scheduled to be sentenced on May 22nd and is facing a maximum statutory penalty of five years in prison plus civil fines of $250,000 for each count of tax evasion.
III. Alabama Tax Preparer Composes 33 False Federal Income Tax Returns For Clients
On January 16th, Alabama tax preparer, Russell Burroughs, was indicted on thirty-three counts of filing fraudulent tax returns. Prosecution alleges that Burroughs intentionally filed tax returns for his clients that claimed energy and education credits and other deductions in which his clients were not entitled to.
If found guilty, Burroughs will face a statutory maximum sentence of three years in prison for each count of filing a fraudulent federal income tax return he is convicted for.
IV. Idaho Businessman Hides Over $5 Million in an Offshore Account — Now Serving 42 Months in Jail
On May 13, 2013, a federal jury sentenced Idaho business operator, Michael Fitzpatrick, to 42 months in prison in part for committing offshore tax evasion. Fitzpatrick deposited more than $5 million of corporate and personal earnings in an offshore bank account located in the Dominican Republic without reporting any of it on his individual and corporate federal income taxes. In addition to serving time in jail, the Court ordered Fitzpatrick to pay restitution to the IRS in the amount of almost $1.4 million for unpaid individual and corporate federal income taxes.
In summary, the IRS is cracking down on both domestic and offshore tax evasion schemes and referring more cases than ever to the Department of Justice to criminally prosecute.
If any of these fact patterns relate to you and you wish to remove your exposure for past tax crimes, consider making a voluntary disclosure. Do not wait until the IRS begins auditing or investigating you. We can protect you from serving jail time for your past fraudulent behavior over income tax filings.
If you are already under criminal investigation by the IRS, we can advise you of your options and devise a strong defense that can save you from facing jail time.