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According to a Department of Justice press release, a Rhode Island business owner was recently sentenced to serve three years in federal prison after evading the payment of taxes for over a decade. This story should serve as a reminder to those who have failed to live up to their tax obligations. If you have failed to file a tax return for one or more years or have taken a position on your filed tax return(s) that could not be supported upon audit or criminal tax examination, it is in your best interest to consult with an experienced tax defense attorney to determine your best route forward.
Court records reveal that Billie R. Schofield was the owner of Northern Pelagic LLC and received a substantial amount of income from the business. Prosecutors alleged that beginning in 2009, Schofield failed to file tax returns. Additionally, he took steps between 2008 and 2018 to obstruct the government’s ability to collect taxes. Schofield’s efforts included routing payments through nominee entities, writing checks to cash, and providing false instruments to the IRS in an attempt to extinguish his tax debt. All in all, prosecutors and IRS investigators estimated that Schofield’s actions caused a tax loss of more than $350,000 to the U.S. government.
In addition to being sentenced to serve 36 months in federal prison, Schofield was ordered to serve three years of supervised release. Additionally, he will be required to pay over $364,000 in restitution to the IRS. Lastly, Schofield was ordered to pay a $5,000 fine.
The defendant in the above story did not engage in an elaborate scheme to hide money overseas to avoid tax. He simply stopped paying. When the IRS came after him for the tax that he owed, he falsified documents and made other attempts to thwart collection efforts which amounted to the crime of evasion of payment. Inaction is the start of many instances of criminal tax behavior. For many, trying to forget about unfiled tax returns or a large amount of unpaid tax debt is easier than coming up with a plan to tackle the problem. If any of the factors of Spies are present in a non-filer’s fact pattern, the misdemeanor of non-filing, punishable by 1 year in jail per count, can be ramped up into a felony Spies evasion punishable by up to 5 years in jail per count.
The harsh reality is that the IRS is ramping up their enforcement efforts aimed at non-filers around the country, especially where they are high net worth. The Treasury Department has made it a point to beef up their examination resources by hiring hundreds of additional revenue agents to conduct audits. If you have failed to file an individual or business tax return as required by law or have taken a position on a filed tax return that includes untruthful elements, it is in your best interest to contact an experienced tax defense attorney to discuss your options to come into compliance before your past compliance failures are detected by the IRS.
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.
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