According to a Department of Justice press release, two men were recently sentenced to federal prison after pleading guilty to developing and executing a nationwide tax scheme. While this story illustrates complex violation of tax law, the repercussions of willfully diverging from federal tax requirements apply to any taxpayer, regardless of the magnitude of the crime. If you have failed to file a tax return for one or more years, or have filed a tax return that was knowingly false, it is in your best interest to contact an experienced tax defense attorney to discuss your options to come into compliance.
Court documents reveal that Iran V. Backstrom of Milledgeville, Georgia, and Mehef Bey, of Charlotte, North Carolina, developed and worked with other defendants to carry out a tax refund scheme. The scheme, which was promoted across the country, falsely advertised that taxpayers were due large amounts of tax refunds based on their home mortgages and other debts. After convincing unsuspecting taxpayers to sign up, the defendant and co-conspirators filed false tax returns in the names of the participants claiming more than $25 million in false refunds.
The tax returns filed by the co-conspirators on behalf of the scheme participants claimed that banks and other financial institutions had withheld large sums of money from payments made to scheme participants. In a further attempt to perpetuate the scam, the defendant and co-conspirators filed phony withholding documentation purporting to be from the banks and other financial institutions mentioned above.
Backstrom was sentenced to serve 105 months in federal prison. Bey was sentenced to serve 11 years in federal prison. Upon the completion of each of the defendants’ federal incarceration, they will serve a term of supervised release for three years. Finally, the defendants were ordered to pay over $26 million in restitution to the United States, representing the amount of tax loss caused.
As indicated above, the magnitude and complexity of the tax scheme used by the defendants in this case is not the reason that they were convicted. The IRS and Department of Justice will pursue tax law violations regardless of the amount in controversy. While certain aspects of civil penalties may more heavily rely on the amount at issue as a part of the tax fraud scheme, criminal offenses such as failure to file a tax return, filing a false tax return, tax evasion, and other serious tax offenses do not. The criminal elements of the crimes do not differ based on amount.
If you believe that you may have fallen out of federal income tax compliance, it is important to understand the potentially life-changing consequences that could come with continued non-compliance. If you have failed to file a federal income tax return for one or more years, or have filed an income tax return that knowingly contains false information, it is in your best interest to consult with an experienced tax defense attorney to determine how to get right with the government. Generally, taxpayers who are out of tax compliance experience better outcomes when they voluntarily attempt to rectify their non-compliance, as opposed to waiting for the government to discover the potential criminal activity.
Regardless of your particular 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.
In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento.
Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords, and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client.
If a taxpayer believes or is aware that they have existing noncompliance in their past tax returns and other filings, they may be able to make use of the voluntary disclosure process. Voluntary disclosure is an avenue by which noncompliant taxpayers may submit amended returns together with supplemental documentation. The government will ordinarily reward the taxpayer for coming forward voluntarily without having to be audited or criminally investigated for tax crimes by reducing the civil penalties that ordinarily apply and providing a pass on criminal prosecution for tax crimes.
Voluntary disclosure will not cure every issue, and it is important that you assess its effectiveness before taking this path. Voluntarily disclosing information that the government has already discovered will likely provide no benefit to the disclosing party. In any case, you will want to discuss your options with your Criminal Tax Defense Attorney as soon as possible to determine the best path forward.
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!
Talk to a dually licensed Criminal Tax Defense Attorney & CPA About Your Case Today
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 upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.
The first step in defending yourself against invasive, costly, and potentially life changing IRS civil and criminal tax enforcement action is to share your story under attorney client privilege with a dedicated dually licensed Criminal Tax Defense Attorney & CPA like the ones at the Tax Law Offices of David W. Klasing. Call (800) 681-1295 or schedule online here for an initial case evaluation at a reduced rate.
See our Audit Representation Q and A Library
See our Criminal Tax Law Q and A Library