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Story Update: Former Michigan Business Owner Sentenced to Federal Prison for Tax Fraud

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Story Update: Former Michigan Business Owner Sentenced to Federal Prison for Tax Fraud

 

A Department of Justice press release reveals that a Michigan defendant was recently sentenced to serve a year and a day in prison after filing a false tax return that claimed deductions for phony expenses. This story serves as a reminder to all taxpayers that when filing a business or an individual tax return, there is a serious risk or criminal tax prosecution when potentially overstating items of deduction or understating items of income. 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 not supportable in Federal of State Income Tax Audit, egg shell audit, reverse egg shell audit or criminal tax investigation, it is in your best interest to contact an experienced tax attorney to determine the best strategy to come into tax compliance. 

Defendant Significantly Overstated Deductions

We previously brought you a story outlining this defendant’s guilty plea. If you recall from that story, Robert Nakfoor, of Lansing, Michigan, pleaded guilty to filing a false individual tax return after he claimed multiple deductions for expenses that he did not incur. The deductions appeared on his 2011 through 2015 individual income tax returns. The deductions related to insurance, legal, and professional services, as well as wages and contracted labor that Nakfoor’s company did not actually incur. Nakfoor admitted that at the time of preparing his tax returns, he knew that the company did not incur such expenses. Prosecutors and the IRS estimated that Nakfoor’s fraudulent tax activity resulted in the underpayment of $481,465 of tax.

In addition to being sentenced to 12 months and one day in federal prison, the defendant was ordered to serve one year of supervised release. Additionally, Nakfoor was ordered to pay restitution to the IRS of just under $482,000, representing the tax loss that he caused.

Getting Right with the Government After Falling Out of Compliance

Although it is tempting for an individual or business to underreport income or overstate deductions, the IRS is keenly aware of such strategies and are on the lookout. An increased number of examination resources and the continuous upgrade of IRS data systems has allowed the IRS to dramatically increase the number of tax returns that are flagged for examination. If an examiner identifies a sufficient number of “badges of fraud”, the audit is forwarded to a technical fraud advisor who will determine whether a hand off of the audit to the criminal investigation division of the IRS is warranted.

If you have failed to file a tax return for one or more years, or have filed a tax return that is knowingly false, you should consult with an experienced tax defense lawyer to determine your level of civil and criminal exposure. Then, you will jointly decide on a route that best mitigates such exposures while bringing you into income tax compliance. Do not continue to lose sleep over a looming tax audit. Contact a seasoned tax defense attorney to get right with the government.

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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