According to a Department of Justice press release, a Rhode Island woman was recently sentenced to 32 months in federal prison after embezzling more than $1 million and intentionally failing to pay taxes on the embezzled earnings. This story should remind taxpayers that the benefit(s) of committing tax and other financial crimes is generally never worth the potential penalties. 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 in the event of an IRS audit, eggshell audit, reverse egg shell audit or criminal tax investigation it is in your best interest to contact an experienced tax defense attorney to discuss your options to get right with the government and come into tax compliance.
According to court records, Barbara Levy of Portsmouth, Rhode Island, worked as an office manager at a local company. Prosecutors alleged that between 2012 and 2019, she forged over one thousand checks written to herself. After cashing the checks or depositing them into her own bank account, she altered the company’s bank statements to make it appear that the checks she had written out to herself had been written to legitimate vendors for valid business expenses. Once tax time came around, Levy failed to report the amounts that she embezzled as taxable income on her federal income tax returns, causing a substantial underreporting of income.
In addition to being sentenced to 32 months in federal prison, Levy was also sentenced to serve two years of supervised release, commencing upon the completion of her physical incarceration. Lastly, Levy was ordered to pay restitution in the amount of $1,319,849, $260,982 of which is to be paid to the IRS, representing the amount of tax loss that her illegal activity caused.
The defendant in the story above discovered the hard way that all income, even that income that comes from illegal activities, is required to be included in taxable income for tax purposes. As we indicated at the outset of this story, the urge to engage in criminal activity to get ahead on your taxes or otherwise, should be quelled due to the potentially devastating consequences of a criminal tax prosecution.
If you have failed to file a tax return for one or more years or have filed a tax return that fails to include certain items of income or inflates deductible expenses, you should contact an experienced tax defense attorney to discuss your options to come back into tax compliance. Working with a seasoned tax lawyer, you will first identify the potential areas of civil and/or criminal exposure. Then, you will mutually agree on a path forward to bring you back into tax compliance. All the while, you will be represented by a tax lawyer and will not be required to go up against the IRS alone.
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 disclosurebefore 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 being 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!
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.
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