Updating a story that we brought to you late last year, a Florida escort has been sentenced to federal prison after pleading guilty to filing false tax returns. This story should remind taxpayers who have not filed their tax returns annually and those who have provided false information to the IRS that the government has increased its enforcement efforts by hiring hundreds of revenue agents who will be focused on ensuring compliance with federal tax laws. If you are out of compliance, it is in your best interest to contact an experienced tax defense attorney as soon as possible to develop a strategy to get right with the government.
As we indicated as a part of our previous blog relating to this defendant, Jami Kopacz was a paid male escort who served clients across the United States. IRS investigators determined that between 2015 and 2018, Kopacz directed clients to pay him through his S corporation, JK Training LLC. Though, when Kopacz filed his annual Forms 1120-S, he substantially understated the income that he earned. Because his business entity flowed through to his individual tax returns, he implicitly also understated income on his annual Form 1040. The IRS estimates that the tax loss caused by Kopacz totals more than $278,000.
What also interesting to note here is that his Escort income could have been arguable called “illegal source income” which drives home the fact that all income, kosher and above board, or illegal stemming from arguably criminal activity is taxable and can be criminally prosecuted if omitted from a return.
At his sentencing hearing last week, Kopacz was sentenced to serve 21 months in federal prison. In addition to his prison sentence, Kopacz was ordered to pay restitution to the IRS of more than $278,000, representing the tax loss that was caused by his illegal actions.
As tax season approaches, many Americans feel a temptation to understate income, overstate deductions, claim credits they are not entitled to or otherwise benefit themselves by providing knowingly false information to the IRS. Although many Americans believe that their intent is not criminal in nature, the reality is that filing a U.S. business or individual tax return that contains knowingly false information is a federal crime, that can result in physical incarceration and steep financial penalties & restitution.
If you have failed to file tax returns for one or more years or have taken a positions on tax returns that could not be substantiated under an audit, eggshell audit, reverse eggshell audit, or criminal tax examination by the IRS or a state taxing authority, it is in your best interest to consult with an experienced tax defense attorney to determine your options. Working with your seasoned tax lawyer, you will establish the pertinent facts of your case, agree on a strategy to come into compliance, and see that strategy through.
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 disclosure before 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, Kovel CPAs 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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