According to a Department of Justice press release, a Michigan businessman was recently sentenced to 30 months in federal prison for filing a false tax return and participating in a biodiesel scheme. This story should serve as a reminder to those who have filed one or more tax returns that contain inaccuracies that the IRS and Department of Justice are actively pursuing those who have committed tax crimes. If you have failed to file a tax return for one or more years, or have taken a position on a filed tax return that could not be supported upon criminal tax examination, audit, eggshell audit, or reverse eggshell audit, it is in your best interest to contact an experienced tax defense attorney to discuss your options to come into tax compliance while minimizing the risk of criminal tax prosecution.
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!
This story serves as an update to a story that we brought you in late 2019. If you recall from that story, Chandra Yarlagadda, 54, of Bloomfield Michigan, pleaded guilty to filing false income tax returns. Yarlagadda was the owner and operator of Alpha Bioenergy LLC. The company was in the business of purchasing and selling biodiesel fuel. As some may be aware, pursuant to the Clean Air Act and other regulations promulgated by the federal government, companies that are in the business of purchasing and selling biodiesel fuel must purchase Renewable Identification Numbers (RINs) covering the volume of renewable fuel that is purchased or sold. There is an active market for not only the buying and selling of biodiesel fuel, but also for the trading of RINs.
On the Schedule C that was attached to his personal tax return, Yarlagadda vastly inflated the expenses that he incurred related to acquiring the RINs needed for his company. In 2009, 2010, and 2011, Yarlagadda indicated that his RIN acquisition expenses were more than $14 million when he was only legally allowed to claim approximately $80,000 in actual RIN expenses. The overstatement of allowable deductions resulted in Yarlagadda paying substantially less federal income tax than was due. The IRS estimated that Yarlagadda dodged more than $2.3 million in taxes due to his over-inflation of expenses.
In addition to the 30-month federal prison sentence, U.S. District Judge Gershwin Drain ordered the defendant to serve one year of supervised release commencing upon the completion of his physical incarceration. Lastly, Yarlagadda was ordered to pay restitution to the IRS in the amount of $3,285,303, representing the tax loss that he caused.
The key takeaway from this story is that the IRS and Department of Justice will aggressively pursue investigations and, if need be, criminal charges, against those who are suspected of committing tax crimes. The IRS has recently dramatically increased its headcount of staff that will be responsible for conducting audits on businesses and individuals. Thus, if you have a tax exposure related to inaccurately filed tax returns or unfiled tax returns, it is in your best interest to contact an experienced tax defense attorney to get right with the government.
Working with a seasoned tax attorney, you will first work to identify the pertinent facts of your case and quantify the potential civil and/or criminal exposures. Then, you will jointly agree on a path forward to mitigate the potential consequences of an IRS examination, investigation, or Department of Justice prosecution. While you are being represented by a tax attorney, you will not have to worry about going up against the IRS or Department of Justice alone.
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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