It is tempting to think that a mistake on one’s tax returns can lead to no more than a slap on the wrist and maybe a fine. In some cases, this is true. In others, the feds could push hard to pursue criminal charges and the accused can face imprisonment and millions of dollars in fines.
The following will delve into a few examples to help show when a tax crime can lead to serious penalties.
Example #1: IRS goes after tax preparation business
This first example involves an entrepreneur who started tax preparation businesses. The IRS accused the business owner of filing false federal returns for clients, leading to almost $25 million in what the feds claim were fraudulent returns. The IRS further claimed the business owner took steps to hide actions. This led the feds to accuse the business owner of knowing she was avoiding her tax obligations.
When faced with the allegations, the business owner chose to plead guilty to charges of conspiracy to defraud the government and tax evasion. She was sentenced to eight years in prison and required to pay over $25 million in restitution and fines to the IRS.
Example #2: Small business owner accused of failing to pay employment taxes
The feds also built a case against a New York man who started an ambulance service company. The prosecution stated he failed to pay employment taxes from 2013 through 2019. As a result, they claim that he owed over $1 million.
He has pleaded guilty to the charges and agreed to pay back $1.2 million in restitution. He faces up to five years imprisonment and additional restitution as well as monetary penalties at his upcoming sentencing.
What led to the serious penalties?
In both of these cases, the prosecution pushed to show that the accused had some level of intent when they failed to meet their tax obligations — that they likely knew they were doing something wrong. This knowledge can be the trigger that leads to prison time in these types of cases.
This is just one of the areas that the prosecution will try to push to get a more serious penalty. It is important to review the charges and allegations and know how they will impact your situation so you can build a proper defense. The attorneys at Goldburd McCone are familiar with these types of issues and can discuss the implications, better ensuring you know what you are facing and how to fight back.