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Small Business Owner to Spend Three Years in Prison for Tax Evasion

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    Many small business owners around the country often complain of the costs of running a business. From labor to supplies, it is getting more and more expensive to live the American Dream. One of the harshest realities of owning your own business is the requirement to pay tax. Whether you make very little or hit it big, the government will always be waiting in the wings to take their share. The good majority of taxpayers with their own businesses pay their taxes as the law requires, but there are a handful of individuals who decide to take matters into their own hands and attempt to cheat the tax system. As you will read in this story, cheating on your taxes doesn’t pay; in fact, it will typically result in the destruction of everything that you have worked hard to achieve.

    According to local news reports, Long Clayton, 50, of Hillsboro, Illinois, turned himself in to local authorities after pleading guilty to state tax evasion and identity theft. According to the report, Clayton operated a restaurant in Hillsboro that was behind in state sales tax. In a response to the balance owed, the Illinois Department of Revenue revoked Clayton’s business tax identification number. To continue operating his restaurant, Clayton was able to convince several current and former employees to allow the restaurant to use their taxpayer information. When the tax bills came due, Clayton failed to pay. It is reported that the business shorted the state and local governments over $40,000.

    When the Illinois Department of Revenue’s Criminal Investigation Division looked into Clayton’s actions, they discovered that in addition to evading state taxes, he had used a former employee’s social security number in order to open a utility account that was used for the business. When the utility bills subsequently went unpaid, the service provider had no one to go after but the former employee.

    As part of a plea arrangement, Clayton pleaded guilty in a circuit court in Montgomery County. He will serve three years in state prison and pay the Illinois Department of Revenue over $44,000. Furthermore, he was ordered to pay just over $2,000 to the utility company that was defrauded using the former employee’s identifying information. Clayton’s criminal conviction will be a stain on his record that may prevent him from ever receiving any assistance (private or public) to operate a business.

    As demonstrated by the story above, going to prison and paying astronomical amounts of restitution is not worth the benefits that committing tax fraud provides. If you find yourself being audited by the IRS or state taxing authorities, it is in your best interest to contact an experienced tax attorney as soon as possible. Some taxpayers make the mistake of relying solely on their accountant to defend them during an audit, but in reality, only a tax defense attorney has had the requisite legal training to fully and adequately represent your interests. Tax lawyers receive training in Constitutional Law, Criminal Law, and Criminal Tax Procedure.  Understanding what to say and what not to say during an investigation can alter the direction of the questioning and can either lead to further incriminating statements or the agent dropping this issue. Alternatively, there are some taxpayers who choose to go up against the IRS or state taxing authority alone, without any advice whatsoever. It isn’t hard to imagine why that isn’t a very good idea.

    The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing small business taxpayers in a myriad of tax matters. Whether you are structuring your business to be tax efficient or are being examined or investigated by a taxing authority, our team of professionals are ready to zealously advocate for your best interests. Don’t roll the dice by representing yourself with the livelihood of you and your family on the line: sleep easier knowing that your case is being handled with the utmost professionalism and experience. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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