Those who illegally evade their income tax obligations can face serious civil and criminal tax penalties like fines and even prison sentences. Generally, more severe penalties will be imposed on defendants who create greater tax losses. However, several other factors may be considered when the government assesses penalties against tax evaders.
For example, a taxpayer in Texas named Peter Tignini has recently pleaded guilty to tax evasion. He deliberately underreported his income and caused the government to incur a tax loss of over $1 million. Furthermore, Tignini attempted to impede the investigation against him by manipulating employment contracts and payroll documents to make it appear as if his fraudulent returns were submitted by his employer. As a result of his attempt to impede an Internal Revenue Service (IRS) investigation, the penalties he faces may be more severe.
If you have encountered or live in fear of a civil or potentially criminal tax issue, seek guidance from our Dual-Licensed Tax Lawyers & CPAs by calling the Tax Law Offices of David W. Klasing today at (800) 681-1295 or click HERE to schedule a reduced rate initial consultation.
Peter Tignini’s Tax Evasion Scheme
In a recent legal development, a Texas man named Peter Joseph Tignini has pleaded guilty to evading his federal income taxes. According to court documents and statements made during the court proceedings, Tignini engaged in fraudulent financial activities spanning the period from 2013 to 2018. During this time, he was employed in the United Arab Emirates (UAE) and Qatar, amassing a substantial income of approximately $4,783,031. He chose to deposit this income into foreign bank accounts, setting the stage for his tax evasion scheme.
Specifics of Tignini’s Scheme
Tignini’s fraudulent actions primarily revolved around misreporting his income on his tax returns. From 2013 to 2017, he deliberately submitted tax returns that falsely stated his income to be around $100,000 annually. This amount conveniently hovered near or below the Foreign Earned Income (FEI) exclusion threshold. The FEI exclusion allows U.S. citizens residing and working in foreign countries for a significant portion of the year to exclude a portion of their foreign-earned income from their taxable income in the United States. Notably, Tignini failed to file a tax return for the year 2018 altogether. As a direct consequence of his actions, Tignini inflicted a substantial tax loss of $1,169,348 upon the Internal Revenue Service (IRS).
Impeding the IRS Criminal Tax Investigation
To further perpetuate his deception, Tignini took illicit steps after being interviewed by IRS Special Agents. He employed an internet application to manipulate his employment contract and payroll documents, making them appear as if his former employer were responsible for filing his tax returns and handling the associated tax payments. Subsequently, Tignini provided the fraudulent documents to the Justice Department’s Tax Division and the IRS through his attorneys. This audacious manipulation continued as Tignini sought to cover his tracks by attempting to delete the incriminating documents from his account once investigators raised questions about the authenticity of the documents.
Potential Consequences for Tignini
The potential legal consequences for Tignini are significant. He faces a maximum statutory penalty of five years in prison, in addition to a period of supervised release, restitution, and monetary fines. The final sentence, however, will be determined by a federal district court judge who will carefully consider the U.S. Sentencing Guidelines and other relevant statutory factors. Acting Deputy Assistant Attorney General Stuart M. Goldberg from the Justice Department’s Tax Division, U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas, and Special Agent in Charge Ramsey E. Covington of the IRS-Criminal Investigation (IRS-CI) Houston Field Office jointly made the announcement regarding this case.
The IRS-Criminal Investigation (IRS-CI) is currently leading the investigation into this matter. Senior Litigation Counsel Sean Beaty and Trial Attorney Brian Flanagan from the Justice Department’s Tax Division, along with Assistant U.S. Attorney Adam Goldman representing the Southern District of Texas, are spearheading the prosecution efforts in this significant case of tax evasion.
What to Do in Your Case
Tignini’s case shows that the U.S. government treats tax evasion cases very seriously. If you are concerned about being accused of tax evasion, our Dual-Licensed Tax Lawyers & CPAs can offer you valuable support and guidance. We will review the specifics of your case and explain the appropriate course of action. Accordingly, you may avoid facing consequences similar to those faced by Tignini.
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.
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 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 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!
Different Methods the IRS Uses to Catch Tax Evaders
There are several different ways that the IRS can catch tax evaders. For example, they may utilize any of the following methods to uncover illicit behavior:
Data Matching and Cross-Referencing
One of the IRS’s key strategies in identifying tax evaders is through the meticulous analysis of vast amounts of financial data. The agency employs advanced technology to cross-reference various sources of financial information, including W-2s, 1099s, and other income-reporting documents. This data matching technique enables the IRS to compare the income reported on tax returns with the income reported by employers, financial institutions, and other entities. Discrepancies or unreported income can trigger further investigation, prompting the IRS to delve deeper into taxpayers’ financial records.
Computer Algorithms and Risk Scoring
The IRS utilizes sophisticated computer algorithms and risk-scoring models to identify tax returns that display characteristics commonly associated with tax evasion. These algorithms assess a range of factors, such as unusually high deductions or credits, inconsistencies in reporting, and deviations from statistical norms. Tax returns flagged by these algorithms are subjected to additional scrutiny by IRS agents, increasing the likelihood of discovering fraudulent activities.
Whistleblower Program
The IRS operates a whistleblower program that incentivizes individuals with insider knowledge of tax evasion schemes to come forward and report such activities. Informants can receive a percentage of the recovered taxes if their information leads to successful enforcement actions. This program has proven effective in uncovering complex tax evasion schemes that might otherwise have remained hidden.
Bank Secrecy Act Reports and Foreign Account Reporting
Financial institutions are required to file reports under the Bank Secrecy Act for certain transactions, including large cash deposits and international wire transfers. Additionally, taxpayers with foreign financial accounts must report these accounts to the IRS through the Foreign Bank and Financial Accounts (FBAR) and Foreign Account Tax Compliance Act (FATCA) reporting requirements. The IRS uses these reports to identify taxpayers who may be evading taxes by hiding income or assets offshore.
Industry-Specific Audits
The IRS focuses its audit efforts on specific industries that are more prone to tax evasion. By analyzing industry-specific data and conducting targeted audits, the agency can uncover patterns of non-compliance and identify potential tax evasion schemes that are unique to certain sectors.
Social Media and Open-Source Intelligence
In the digital age, social media platforms and open-source information can provide valuable insights into an individual’s financial activities. The IRS may review publicly available information to corroborate or challenge the financial information reported on tax returns. For instance, extravagant lifestyles displayed online that don’t align with reported income may trigger further investigation.
Contact Our Dual-Licensed Tax Lawyers & CPAs Today for Help with Your Case
Get support from our Dual-Licensed Tax Lawyers & CPAs at the Tax Law Offices of David W. Klasing by dialing (800) 681-1295.
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