According to a Department of Justice press release, a West Hollywood art dealer was recently charged with several federal criminal counts, including tax fraud, wire fraud, and aggravated identity theft. Although the particulars of this story may not relate to those of most other taxpayers, the overarching theme of the story applies to everyone: the IRS and Department of Justice are working hard to weed out those who are out of tax compliance. If you have failed to file tax returns for one or more years or have taken a position on a tax return that could not be sustained during a tax audit, it is in your best interest to contact an experienced tax attorney to discuss your options.
Prosecutors allege that Philip Righter, 43, of West Hollywood, was in the business of dealing art. There was only one problem: the art pieces that Righter was selling were fake. Prosecutors allege that the art pieces were not only painted by someone other than the artist they were purported to be painted by, but Righter allegedly forged signatures of the artists to portray true authenticity. Prosecutors allege that Righter’s art scheme caused a loss to unknowing buyers of more than $750,000.
From a tax perspective, Righter used his allegedly fraudulent art in an attempt to lower his tax bill. Prosecutors allege that Righter took a tax deduction related to a charitable donation of one of his art pieces, resulting in a fraudulent tax refund of over $50,000. Additionally, Righter filed an amended return for the tax year 2015 to include a casualty and theft loss. In the amended filing, he claimed that the value of the stolen painting was $2,575,000, when in reality, prosecutors argue that it had a value closer to $0. The refund relating to his amended return created a carryback that was used to offset income in prior tax years, resulting in an additional tax refund of approximately $52,000.
Righter agreed to plead guilty to the charges and faces a maximum of 25 years in federal prison. When he is sentenced, he could also be sentenced to serve a period of supervised release. Finally, Righter will likely be ordered to pay restitution to his victims and to the IRS.
The story detailed above involves an elaborate art scheme and an associated tax fraud scheme. But most cases of tax fraud and evasion in America do not involve a fact pattern that is as intriguing. Tax fraud takes many shapes and the IRS and state tax authorities are trained to sniff if out, regardless of its characteristics. Whether you have failed to file a tax return for one or more years, or if you have taken deductions or credits that you were not entitled to, it is critical to rectify your tax noncompliance before you are contacted by the IRS.
During this unprecedented COVID-19 pandemic, taxpayers who are out of tax compliance have a unique opportunity to get right with the government. The IRS has announced that new audits of individuals would not be initiated unless the taxpayer initiates the contact (e.g., a refund request or amended return) or the statute of limitations is set to expire. This provides taxpayers an opportunity to work with an experienced tax defense attorney to come into compliance with their tax obligations before the IRS starts their examination back up at full speed.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed returns coupled with affirmative evasion of payment) 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 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, Kovel CPAs 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!
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