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Seven South Carolina Tax Professionals Plead Guilty to Various Tax Crimes

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    According to a Department of Justice press release, seven tax preparers in South Carolina recently pleaded guilty to conspiracy and other tax crimes after helping a multitude of clients fraudulently lower their taxes through bogus deductions, credits, and other fraudulent tax return mechanisms. As we approach tax season, this story should serve as a reminder that the IRS is vigorously and actively pursuing those who have failed to properly file their tax returns and pay the amount due. If you have failed to file a tax return for one or more years or have taken an unsupportable position on a filed return, you should contact an experienced tax defense attorney as soon as possible to determine the best method to get right with the government.

    Defendants Used “Cheat Sheets” to Apply Fraudulent Tax Strategies

    Court documents reveal that Joseph Octave was the owner and operator of Kapital Financial Services. Along with Vonyeda Carson, Melissa Greene, Natisha Holloman, Kimberly Joline, Whitney Vargas-Medrano, and Wendia Courtois, Octave admitted assisting taxpayers secure fraudulent refunds by falsifying tax returns. The illegal activity occurred between 2014 and 2019.

    As a part of Octave and his colleagues’ efforts to fraudulently decrease tax liabilities and increase refunds, the group used a “cheat sheet” that included common illegal strategies such as falsely claiming large deductions, the American Opportunity Credit, and the Earned Income Tax Credit. To shield the illegal behavior from clients, some of which had no idea anything wrong was occurring, workers were given scripts that indicated they could not hand over copies of filed tax returns.

    Kapital Financial Services is estimated to have earned over $700,000 in fees for preparing the fraudulent returns, most of such fees were paid to Octave. Sentencing has not yet been scheduled. Octave faces up to eight years in prison, while the other defendants face up to five years in prison. All the defendants will likely be ordered to serve a period of supervised release and could be ordered to pay restitution to the IRS.

    Knowing When to Seek Help from a Tax Lawyer

    In most of our blog posts, we highlight taxpayers who have taken steps to avoid paying their taxes. This story highlights the reality that just because your tax return was prepared by another individual, you may still be sitting on a huge tax liability and even may have criminal tax exposure. The liability could dramatically increase if you knew or should have known that your taxes were fraudulently filed. For instance, if you sign a tax return with business losses for a business that you do not have or are claiming an American Opportunity Credit when you are not in school, you could face criminal tax charges, whether you paid another individual to prepare your return or not.

    It is critical to be aware of IRS enforcement initiatives and take steps to ensure your previously filed tax returns can withstand the scrutiny of an examination. If you have failed to file a tax return for one or more years or have taken a position on a tax return that is false and could not survive audit scrutiny, it is in your best interest to seek the assistance of an experienced tax defense attorney. The IRS has hired hundreds of new revenue agents to help with tax examinations. Get right with the government before the IRS and Department of Justice discover your compliance shortcomings.

    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!

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