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Story Update: Hotel Operator Sentenced After Federal Tax Conviction

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Story Update: Hotel Operator Sentenced After Federal Tax Conviction


According to a Department of Justice press release, a Michigan hotel manager has been sentenced after being convicted of falsifying business tax returns. This story is an update from previous reporting on the same defendant and is a reminder to those who have intentionally filed a false tax return or have failed to file annual tax returns, as required by law. If you are not compliant with your individual or business income taxes, it is in your best interest to contact an experienced tax defense attorney to determine the best strategy to bring you back into tax compliance without facing criminal tax prosecution.

Defendant Intentionally Understated Hotel’s Income, Convicted

If you recall from our previous story, Karl Walls and his son, Harold Walls, both of Clare, Michigan, operated the Days Inn Clare. Karl Walls owned the hotel, while Harold managed its daily operations. Federal prosecutors alleged that between 2013 and 2017, Harold took steps to ensure that he was not compensated through the hotel’s payroll system used to pay other employees, but instead through other means such as through the payment of his personal non-hotel related expenses through the hotel’s operating bank account. During those years, Harold failed to include such amounts as a part of his annual individual income tax return.

For tax years 2012 through 2017, Harold Walls caused his father to provide tax preparers fraudulent and otherwise misleading information about the hotel’s operations in the process of completing Karl Wall’s annual individual income tax return. The information provided to Karl Walls’ tax preparer omitted substantial amounts of room revenue, as well as indicated that various inflated expenditures were sustained.

Lastly, the federal indictment included charges related to the Walls’ activity after learning that a criminal tax investigation had been launched. After informing Harold Walls that he was the subject of a criminal tax investigation, he made several false statements to the IRS. Additionally, Karl Walls made attempts to pressure witnesses, including a hotel employee, to provide false information to the IRS and other federal prosecutors.

Harold Walls was sentenced to serve one year and one day in federal prison. In addition to the prison sentence, he was ordered to serve three years of supervised release upon the completion of his physical incarceration. Lastly, he was ordered to pay more than $250,000 in restitution to the IRS, representing the total amount of tax loss caused.

Coming Into Federal Tax Compliance Before It’s Too Late

The defendant highlighted above could be any American who has fallen behind on their tax obligations or has engaged in some level of tax fraud. The general rule that applies to nearly all instances of tax noncompliance is the earlier a taxpayer attempts to correct their position with Uncle Sam, the better the outcome. Waiting for the IRS to open an audit, eggshell audit, reverse eggshell audit or criminal tax investigation or initiate a criminal referral takes many options to rectify your noncompliance off the table.

If you have failed to file a tax return for one or more years or have filed a tax return with knowingly false information contained within it, you should contact an experienced tax defense attorney to determine the best way to get right with the government. The IRS has various programs in place and tax attorneys have several strategies aimed at bringing you back into tax compliance. Together, you and your seasoned tax lawyer will choose a path that makes the most sense for you.

We Are Here for You

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.

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.

Concerned About Criminal Tax Charges? Call the Tax Law Offices of David W. Klasing

If you are dealing with serious tax matters, you deserve tax assistance that you can rely on. Schedule your first reduced-rate case evaluation with our Criminal Tax Defense Lawyers by calling (800) 681-1295 today or schedule online here.

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.


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!

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