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Virginia Businessman Convicted of Tax Fraud, Failing to File a Return

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Virginia Businessman Convicted of Tax Fraud, Failing to File a Return


According to a Department of Justice press release, a Virginia man was recently convicted of multiple criminal counts related to filing false tax returns and failing to file a tax return after he attempted to dodge the payment of taxes on large sums of business income that he earned. This story should remind taxpayers that claiming deductions for expenses that were not incurred or claiming other unsupportable tax positions can cause much more harm than good. If you have failed to file a tax return for one or more years or have taken a position on a federal or state tax return that could not be substantiated upon an audit, eggshell audit, reverse eggshell audit or criminal tax investigation, you should contact an experienced tax defense attorney to determine your best avenue to come back into tax compliance and avoid criminal tax 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 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!

Defendant Significantly Understated Income and Fraudulently Inflated Deductions

Court records reveal that Michael Tiernan, 62, of Williamsburg, Virginia, was a financial officer for Ford’s Colony Realty, LLC. Prosecutors alleged that between 2015 and 2016, Tiernan filed federal income tax returns that severely understated the income that he earned from his employment. The income that was reported was fraudulently offset by deductions for expenses that were not actually incurred. In 2015, the defendant claimed that he was insolvent and was therefore not liable for taxes related to the discharge of a portion of his indebtedness.

At his trial, prosecutors introduced evidence that proved that Tiernan underreported income by nearly $300,000 in 2015 and more than $204,000 in 2016. In 2017, Tiernan failed to file a federal tax return altogether. The defendant’s sentencing is scheduled for later next year. He faces up to seven years in prison. Additionally, Tiernan may be sentenced to serve an additional term of supervised release to commence upon the completion of any physical prison stay. Lastly, Tiernan will likely be ordered to pay restitution to the IRS, representing the tax loss that he caused.

Getting Right with the Government After Falling Behind

The defendant in this case obviously made several mistakes. First, taxpayers are required to include all of their taxable income when filing tax returns. The IRS and state taxing authorities have multiple methods that identify taxpayers who underreport large amounts of income. Likewise, taxing authorities target taxpayers who intentionally inflate deductions for expenses that were not incurred. Lastly, failing to file a tax return is simple to detect and can bring additional scrutiny to other tax returns that have been filed.

If any of the facts in the above story are familiar to your tax situation, you should contact an experienced tax defense attorney to identify and quantify your civil and/or criminal tax exposure. Together with your seasoned tax attorney, you will work to establish the pertinent facts of your case and then develop a roadmap to get you right with the government. During that process, you will not have to go up against the IRS or state taxing authority alone.

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