The Internal Revenue Service (IRS) has a reputation for aggressive pursuit of those it believes commit tax fraud — but what does this mean? In a recent example, the feds came after a New York family who owned a coffee and donut business. They claim the family worked together to hide income and moved forward with charges for alleged tax evasion and conspiracy to defraud the government.
The business owners maintained their innocence throughout the process.
The government claimed that over a span of five years the business owners failed to disclose over $4 million in cash sales at their shop. Instead, they claim the family pocketed the cash and took steps to intentionally avoid their individual tax obligations with the following tactics:
- Putting funds in the wrong accounts. The IRS claims the family would put the earnings from these cash sales in a series of personal and business accounts. This led to their accountants using inaccurate information to file individual tax returns.
- Using unreported income to buy luxury goods. The government also claims the family tried to hide the cash earnings by using them to buy various goods like luxury vehicles and real estate.
These allegedly intentional actions led the government to pursue criminal tax charges against the family. The family maintained their innocence and fought back. A federal jury agreed with the government and convicted all three. They are now each facing 10 to 30 months imprisonment as well as monetary fines and restitution.
Business owners in similar situations are wise to take an investigation and allegations of wrongdoing seriously. The government will not assume it was a simple mistake or clerical error. They will push for criminal penalties and, as this case shows, have found success convincing juries. The attorneys at Goldburd McCone LLP can put their experience fighting back against the IRS when they come after business owners, whether in New York or elsewhere, to work for you. We can use this experience to help you build the strongest defense possible to guide negotiations or fight for your rights in a courtroom battle.