According to a Department of Justice press release, Jeffrey and Karen Dalton of Virginia were sentenced to spend time in a federal prison, last week. Following a trial where a jury found the Dalton’s guilty of tax evasion and conspiring to structure currency transactions, Jeffrey Dalton was sentenced to just over two years and Karen Dalton’s prison term will last six months. Additionally, the Daltons will each serve two years of supervised release.
Prosecutors alleged that the Dalton’s, who owned Blue Ridge Stainless, Inc., filed personal tax returns for tax years 2009 through 2014, including the income earned from their business but failed to pay the underlying taxes, penalties, and interest owed with regard to those years. The IRS attempted to contact the Daltons for a number of years and notified them several times about collection actions, such as tax liens. In failing to pay their tax liability, the Daltons used nominees to conceal their ownership of property, filed false documents with the IRS, and used their business’s bank account to pay for extravagant personal expenses.
In addition to evading the IRS, the Daltons were accused of making several withdraws from their business bank account in amounts just short of $10,000, in an attempt to evade federal law that requires banks to report withdraws of more than $10,000. During 2015 alone, prosecutors alleged that the Daltons structured more than a quarter of a million dollars of withdraws in this manner.
Many believe that only those who don’t file tax returns go to prison. That simply isn’t the case. The story of the Daltons illustrates that criminal penalties can result even if a defendant has filed their taxes. Tax evasion occurs where illegal actions are taken by individuals, corporations, or other entities in order to evade having to pay the true amount of income tax. Here, the Daltons didn’t contest, falsify, or mislead with respect to the amount that they owed the IRS. They simply refused to pay that amount.
Tax evasion carries serious consequences. A federal judge may sentence a defendant to up to five years in a federal prison for each count of tax evasion. If the Department of Justice is going after someone for multiple years of evading taxes, the potential incarceration time is high. Further, the court will typically include a period of supervised release and order the payment of fees, penalties, and interest.
When to Contact a Tax Attorney
One of the most commonly asked questions surrounding tax audits is when to get a tax attorney involved. Most tax professionals agree that it is best to contact an experienced tax defense attorney at the first sign of an audit or examination. A tax defense lawyer will assist with each step in your tax audit and any subsequent investigation or litigation. An experienced tax defense attorney will ensure that you do not provide evidence or statements that is not required by law and can be used against you at a later date, perhaps in a criminal proceeding.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have assisted taxpayers from all walks of life in a myriad of tax scenarios. From defending against an IRS or state tax audit to wealth planning while keeping tax efficiencies in mind, our team of zealous advocates are ready to assist in the development and implementation of a sound tax strategy. Don’t lose sleep over tax uncertainties. Contact the Tax Law 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.
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.
Helpful YouTube Videos:
Why should I hire the Tax Law Offices of David W. Klasing to represent me in an audit? https://youtu.be/00wj_-Q18w4
So, you cheated and you’re under audit: https://youtu.be/FZce4jqQJpI
Criminal Tax Evasion: https://youtu.be/2rBasJaRz2o
Helpful Q and A Libraries:
https://klasing-associates.com/topics/audit-representation-faq/
https://klasing-associates.com/topics/non-filer-assistance-faq/
https://klasing-associates.com/topics/criminal-tax-representation-faq/
