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According to local news reports, an Oregon man was recently sentenced to serve 41 months in federal prison after pleading guilty to multiple tax crimes related to stealing government funds, obstructing the IRS, and filing false tax returns. This story should remind taxpayers that the potential benefits of violating federal tax law are invariably far outweighed by the potential consequences of being criminally convicted of tax offenses. 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.
We first brought you the story of Robert Andrew Lund, a former Hewlett Packard computer engineer, earlier this year. Lund was recently sentenced after pleading guilty to six felony charges that related to his failure to pay more than $2.7 million in federal income taxes. If you recall from our previous story, federal prosecutors alleged that in 1993, Lund took part in an offshore trust tax scheme to hide profits from his business, Lund Performance Solutions. As a part of that scheme and despite his business being wildly profitable, he reported no income on his federal income tax returns from 1994 through 1996. An IRS audit revealed that he owed more than $2.7 million in taxes and penalties.
Lund used the funds that should have otherwise been paid in taxes to live a lavish lifestyle. From purchasing 90 acres of land and building a massive estate, to purchasing a plethora of local businesses, Lund attempted to emasse a small empire. At the same time, prosecutors alleged that Lund applied for, and received, over $70,000 in federal welfare benefits, claiming that he was a part-time handyman making less than $1,000 per month.
Lund disputed his $2.7 million tax bill, taking his case as high as the Ninth Circuit Court of Appeals, where the IRS ultimately prevailed. After challenging his tax debt the conventional way, Lund resorted to farfetched legal arguments including those that included that he was not a U.S. citizen, therefore not subject to the reach of the IRS. Additionally, Lund hid assets from the IRS using nominee accounts and strawman entities.
As a part of his guilty plea, Lund agreed to plead guilty to tax evasion, failure to file individual income tax returns, theft of government funds, obstructing the IRS, and making false statements in a bankruptcy case. In addition to the defendant’s three year and five-month federal prison sentence, Lund agreed to pay $1.7 million in restitution to the IRS and $70,000 to the Oregon Health Authority as a part of his plea agreement entered into in July.
Many taxpayers who have either failed to file tax returns timely or who have filed tax returns with knowingly false information are often under the false impression that the likelihood of them being caught is extremely low. Additionally, taxpayers mistakenly believe that if they are caught by the IRS, they will be able to talk their way out of it. Many taxpayers, including the defendant above, have likely learned that the benefits of violating federal tax laws are generally far outweighed by the detriment faced by those who are convicted of violating those laws.
If you have unfiled tax returns or have filed an individual or business tax return containing knowingly false information, you should consider consulting with an experienced tax defense attorney. Together, you will work to determine the potential civil and criminal exposures involved in your case. Next, you will jointly decide on a plan to get right with the government. The IRS has added a significant amount of examination capacity over the past several years. Much of this capacity involves complex artificial intelligence and data analytics that allows agents to uncover those who are not in compliance with federal tax laws with ease. It is not worth the risk to take a wait-and-see approach as to whether the government will discover your tax noncompliance.
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!
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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