Texas Tax Attorney Indicted on Conspiracy and Other Tax Charges

According to a Department of Justice press release, a Texas tax attorney was recently indicted on conspiracy and aiding in the preparation of false tax returns after allegedly assisting a client avoid tax on approximately $225,000,000 of capital gains. The key takeaway from this story is that, while there are legal methods to reduce your tax liability, using nominee entities to fraudulently reduce your tax bill is not one of them. If you have failed to file a tax return for one or more years or have engaged in activities that could be construed as tax fraud or evasion, it is in your best interest to contact an experienced tax defense attorney to discuss your potential exposure and to develop a strategy to come into tax compliance.

Defendant Allegedly Set Up Foreign Nominee Entities to Evade Taxes

Court records reveal that Carlos Eepke, a Houston tax attorney, assisted Robert F. Smith avoid tax on hundreds of millions of dollars of capital gains. Prosecutors allege that, beginning in 2000, Eepke established a limited liability company in Nevis called Flash Holdings. Additionally, Eepke allegedly established Excelsior Trust, a trust in Belize. When Smith earned income from investments in private equity funds, the earnings were made in bank accounts in the name of Flash Holdings in Switzerland and the British Virgin Islands. Criminal investigators from the IRS and the Department of Justice argue that this allowed Smith to avoid paying tax on the capital gains because Flash Holdings was directly owned by Excelsior Trust, and not Smith. Eepke is also alleged to have assisted Smith file false tax returns in tax years 2012 through 2014. Smith was allegedly paid approximately $1,000,000 for his services.

If convicted, Eepke faces up to five years in prison on the count of conspiracy. If convicted on the counts related to aiding and assisting in the filing of a false tax return, Eepke faces up to three years, on each count. If Eepke is convicted, he also faces a period of supervised release and may be required to pay restitution to the IRS, representing the tax loss suffered.

Coming into Tax Compliance Before the IRS Contacts You

As we indicated at the outset of the story, there are countless strategies that tax lawyers can use to lower a taxpayer’s overall tax bill. Breaking the law is not an acceptable method of achieving such a goal. An effective tax attorney will work with you to understand your set of facts and recommend a strategy that both provides value and complies with federal and state tax laws.

On the other hand, 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 be considered fraudulent or constitute tax evasion, it is in your best interest to contact an experienced tax defense attorney as soon as possible to discuss your options to get right with the government and avoid criminal prosecution. In the past year, the IRS has dramatically increased the headcount of its examination teams to identify those taxpayers who have not complied with the nation’s tax laws. A seasoned tax attorney will help identify the exposures that you have and suggest a path forward to get right with the government before the IRS comes looking for you.

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!