A Reminder About Tax Evasion in Tax Season

 Posted on March 20, 2020 in White Collar Crime

Recently, a man in Birmingham pleaded guilty to tax evasion for failing to pay $1.3 million in taxes. John P. Cooney filed false returns in 2011 and the returns were for the three years prior. Cooney was accused of failing to pay $780,000 to the IRS and instead, created a fraudulent company that he then used to conceal his salary and returns from his investments. In addition to facing up to five years in prison, he is also now required to pay $1.3 million in penalties.

The story is an interesting one and a good reminder as Americans head into tax season. It is important everyone understands what tax evasion is, and the serious penalties associated with the offense.

What Is Tax Evasion?

Tax evasion is the act of willfully trying to evade making tax payments lawfully owed to the federal government. To prove tax evasion, the prosecution must show that a person willfully and knowingly tried to avoid making payments to the IRS. The prosecution must also prove that there is an amount owed to the federal government at the time of the prosecution.

Due to the elements of proof, the prosecution has the burden of establishing, a person that innocently fails to pay the IRS is not guilty of tax evasion. For example, if someone incorrectly filed their taxes and legitimately believed they did not owe taxes, they cannot be charged with tax evasion.

Common Types of Tax Evasion

Although any time a person fails to pay their taxes they could be charged with tax evasion, there are some schemes that are more common than others. These include:

• Living out of the company: This term refers to a scheme in which a person uses their company’s money to pay for personal expenses.
• Fraudulent trusts: These schemes involve a taxpayer that creates a trust and places the family home into it so they can deduct maintenance expenses. In another type of fraudulent trust scheme, a person may make it look like they have relinquished control of the business to the trust in order to avoid paying business taxes.
• Pyramiding: In this scenario, an employer collects taxes from their employees but does not return them to the IRS.
• Employee leasing: This scheme is similar to pyramiding but with employee leasing, an employer hires a third party, the employee leasing company, to manage its payroll. The employee leasing company then collects taxes from employees but does not send them to the IRS.

No matter the scheme used, tax evasion is a felony that is punishable by up to five years in prison and very high fines.

Our Illinois Federal Criminal Defense Lawyer Can Help with Your Case

Whether you have been charged with tax evasion or another federal crime, our skilled Chicago federal criminal defense lawyer at the Law Offices of Hal M. Garfinkel can help. Attorney Garfinkel has the necessary experience with the federal criminal justice system to help you navigate it and give you the best chance of success with your case. Call us today at 312-629-0669 to schedule your free consultation.

Source:

https://www.al.com/news/birmingham/2020/02/birmingham-man-pleads-guilty-in-13-million-federal-tax-evasion-case.html