Todd and Julie Chrisley, the married couple who star in USA Network reality show “Chrisley Knows Best” along with their five children, were recently indicted on 12 counts of assorted tax and financial crimes, including tax evasion, wire fraud, bank fraud, and conspiracy. Also facing charges is the Chrisleys’ personal accountant, Peter Tarantino. With Tarantino’s assistance, the Chrisleys allegedly filed and paid federal income taxes late for four consecutive years, simultaneously working to conceal income while engaging in tax obstruction by impeding IRS functions. In addition, the Chrisleys allegedly lied to various banks, providing lenders with manipulated financial records. In so doing, they illegally obtained loans that, in aggregate, amounted to millions of dollars. With the outcome of the heavily-publicized case still anyone’s guess – the Chrisleys’ pretrial conference, at which judges and attorneys resolve any administrative issues that might need addressing ahead of trial, took place September 5 – the famous couple might be facing years of prison time.
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On August 13, 2019, Todd and Julie Chrisley were indicted on federal felony charges of tax evasion, wire fraud, bank fraud, and conspiracy, along with accountant Peter Tarantino, who was also charged with tax fraud. While these are the basic ingredients of many criminal tax cases, this particular case is unlike most others we cover, in one regard: instead of an outright failure to file taxes, or failure to pay taxes, it involves a string of delinquent filings and payments (specifically, for tax years 2013 through 2016). But is that really a crime? And if so, what is the likelihood of being prosecuted for delinquent tax returns?
Being somewhat behind on your taxes, or owing the IRS money, is not necessarily a crime. After all, millions of taxpayers obtain perfectly lawful filing extensions each year, while countless others are granted various forms of tax relief to help pay off IRS debts. However, it is a crime to deliberately avoid filing or paying your federal income taxes, which the IRS calls “acting willfully.” (This is also known as the mens rea, or “guilty mind,” component of tax crimes, discussed in detail here.) While prosecution is unlikely to result from late tax filings, it is certainly not a complete impossibility, as the Chrisleys’ case makes clear. The likelihood increases significantly if the IRS discovers additional badges of tax fraud, such as mismatched sets of books, unfiled income tax returns, underreported personal or business income, improperly claimed tax credits, or indicators that the taxpayer has engaged in illegal practices like “skimming” or “structuring.”
U.S. Attorney Byung J. “BJay” Pak, who was quoted in the DOJ’s press release announcing the indictment, told the media, “Celebrities face the same justice that everyone does. These are serious federal charges and they will have their day in court.” (Proving Pak’s words true, our tax defense attorneys have covered numerous examples of celebrities charged with tax evasion and related offenses, including Grammy Award winner Lauryn Hill, rapper DMX, country legend Willie Nelson, and various star athletes, among them NBA and NFL Hall-of-Famers.)
“The Chrisleys will… have their day in court,” stated FBI Special Agent Chris Hacker, “but anyone else considering this type of alleged activity should take notice.”
This is not a hollow threat. One need only look at IRS criminal investigation statistics, which show that nearly 3,400 investigations have been initiated – so far – during the current fiscal year. To date, more than 2,700 of these investigations have culminated in recommendations for prosecution, and nearly all of them –2,672 in total – have resulted in criminal convictions, with an average of 41 months to serve in federal prison.
The numbers do not lie: the DOJ has a high success rate in prosecuting and convicting alleged tax offenders, who moreover, tend to receive harsh sentences. If you are being investigated by the IRS, have been contacted by investigators regarding another taxpayer, or are worried about a tax audit potentially leading to a criminal tax referral, you need to take every possible measure to protect yourself and mitigate the risks you are facing. Work with a trusted, award-winning team of California tax attorneys who possess decades of experience handling felony, misdemeanor, and civil tax cases involving individuals, businesses, and trusts. To set up a reduced-rate consultation, contact the Tax Law Office of David W. Klasing online, or call today at (800) 681-1295.
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