As we enter tax-filing season, one of the biggest fears of taxpayers is making a mistake on their taxes. Americans visit their trusted tax professionals to ensure that their taxes are done correctly and for the most part, filed returns do not result in an IRS examination. On the other hand, there are taxpayers who intend to deceive the government in the filing of their return. Some do not file tax returns at all. This blog details the story of a Tennessee dentist who got herself into a lot of trouble over failing to file certain returns and failing pay her income and employment tax liability.
According to a press release by the Department of Justice, Andrea M. Henry, 45, of Cordova, Tennessee was sentenced to serve a year in federal prison in relation to a conviction for tax evasion. According to court documents, Henry owned and operated The Henry Polk Dental Group D.P.C. and The Smile Spa LLC. Between tax years 2005 and 2013, Henry failed to file four federal income tax returns. But even in the years that she did file, she failed to report and pay taxes on nearly $115,000 of income. Additionally, Henry withheld employment taxes from her dentistry staff, but failed to pay the withheld amounts over to the federal government. Instead, prosecutors said that she paid for high-end private school, luxury vehicles, and other personal expenses. In an attempt to recover the withheld employment taxes that went un-remitted, the IRS assessed over $160,000 in trust fund recovery penalties against Henry, allowing the government to go after her for the money, personally.
When the IRS assessed penalties against Henry, she stopped using her personal bank accounts and used business bank accounts and accounts in the names of nominees to pay for her expenses. Shortly before Henry’s house was to be foreclosed on, she transferred $130,000 to a nominee who repurchased the house on Henry’s behalf. Before she was arrested, Henry used the same nominee to purchase extravagant and exotic automobiles like as a Dodge Viper.
The Defendant admitted to causing a tax loss of nearly $530,000. In addition to the federal prison sentence imposed by U.S. District Court Judge John T. Fowlkes, Jr., Henry was ordered to serve three additional years in a supervised release program and pay over $650,000 in restitution to the U.S. government. Taxpayers that willfully evade U.S. income tax can face up to five years in a federal prison and can be fined up to $100,000 for each count of tax evasion.
Did You Know: Certain dentists can be at a higher risk for IRS or state tax audits?
An experienced criminal tax defense attorney may have properly resolved many of the predicaments that Ms. Henry found herself in. Ms. Henry is not the first taxpayer to have fallen short of their tax obligations required by law. Typically, the difference between going to prison and resolving the issue with the IRS without incident involves your legal team. Taxpayers who choose to engage a tax attorney with several years of experience in criminal tax defense are better positioned to deal with the IRS. An experienced tax attorney that has had extensive legal training will ensure that you cooperate with the IRS and Department of Justice, but do not divulge sensitive information that could be used against you later.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing taxpayers from all walks of life in various tax situations. Whether you are like Ms. Henry and find yourself out of tax compliance, are facing an eggshell audit, or are looking to come into compliance with Foreign Bank Account Reporting laws, our team of zealous advocates is ready to assist you. Don’t let tax troubles keep you up at night. Contact the Tax Offices of David W. Klasing today for a reduced rate consultation.
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Here is a link to our practice overview video on warning signs than an audit has gone criminal.
What is an effective tax defense in an IRS eggshell tax audit?
https://www.youtube.com/watch?v=7qixPqWTtvA
So, you cheated on your taxes and you are under a tax audit…
https://www.youtube.com/watch?v=FZce4jqQJpI
Why should I hire a tax attorney to represent me in a tax audit?
https://www.youtube.com/watch?v=NDwc4GUfBX8
Foreign income and information non-compliance
https://www.youtube.com/watch?v=g2UlIE8oxPA
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices in San Bernardino, Santa Barbara, Panorama City, and Oxnard! You can find information on all of our offices here.
