26 U.S.C. § 7201 defines what is tax evasion.  It states in relevant part that any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.

Federal prosecutors might also add additional charges beyond tax evasion. Those charges could include conspiracy charges, under 18 U.S.C. § 371, or tax fraud under 26 U.S.C. § 7206.  The United States Sentencing Commission (USSC) recently released its Tax Fraud Report for fiscal year 2023. It states that off the 64,124 cases reported to the Commission in fiscal year 2023, 363 involved tax fraud (down 27% since FY 2019).  It is unclear if this downward trend will continue.

Recently, a man in New Jersey plead guilty to tax evasion. According to the Department of Justice, “for tax years 2015 and 2016, Matthew Tucci, of West Long Branch, NJ, filed tax returns that stated he owed more than $2 million in taxes for both years. Despite admitting that he owed those taxes, Tucci did not fully pay them when they were due. Instead, Tucci purchased real estate and engaged in a series of transactions designed to conceal his interest in those properties.

In 2017, the IRS sent notices to Tucci that he owed taxes, interest, and penalties for 2015 and 2016. After receiving these notices, Tucci transferred multiple properties to an entity owned by another individual, but he continued to exert control over at least two of them. Of the two properties Tucci continued to control, he sold one and refinanced the other. Tucci used the proceeds from these transactions to pay his personal expenses rather than his tax debts. In 2019, Tucci submitted documents to the IRS that falsely claimed that he had no connection to the entity that owned the 12 properties.

He faces a maximum penalty of five years in prison as well as a period of supervised release, restitution, and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.”

In another case, a Florida businessman was sentenced to prison for tax evasion.  According to the  Department of Justice, “David Albert Fletcher, of Deltona, Florida owned and operated furniture liquidations businesses, including Century Liquidators. For tax years 2004 through 2013, Fletcher did not timely file his federal income tax returns or pay the taxes he owed. After an audit, the IRS assessed a total of $1.7 million in taxes, interest, and penalties against him.

To evade collection of these taxes, Fletcher concealed his income and assets from the IRS. For example, Fletcher used nominees to hide his purchases of luxury vehicles, including Rolls Royces. Fletcher also filed false income tax returns that understated his income by several million dollars, and when an IRS special agent interviewed him, Fletcher falsely represented the amount of income he earned.

In addition to his prison sentence, U.S. District Judge Wendy Berger for the Middle District of Florida ordered Fletcher to serve three years of supervised release and to pay approximately $7,112,689 in restitution to the United States.”

Recently, Meg Strickler was able to ensure that no tax evasion charges were filed against her client.  Contact us if you think you might be facing tax evasion or tax fraud charges.  We are here to help.

The “newer” question on page 1 of the Tax Form 1040 now has a question that states, “At any time during the past year did you receive any financial interest in virtual currency?” In 2019, this question was only on Schedule 1.  As of 2020, it is on page 1 of the Tax Form 1040.  This is specifically targeted to combat cryptocurrency tax evasion.

Under 26 U.S.C § 7206(1), it is a criminal offense to file a tax return the filer knows is materially false.  So, if you do not check that box on that first page, AND have substantial income in crypto, you might be targeted by the IRS.  Remember cryptocurrencies are essentially similar to common stocks.  This means a taxpayer must report their gains in cryptocurrencies on Form 8949.  These gains are passed through to Schedule D on personal returns.  The filer is responsible for paying capital gains tax on the net gain for the year.  The government is long since versed in understanding the intricacies of the market like the role of hardware wallets, the use of DEXs, on-chain information, and how to track crypto movement across distributed ledgers.   Please see here for a recent  example of a case where non-payment of federal income tax on cryptocurrency earnings led to a conviction.

Contact Conaway & Strickler, PC if you have any questions on these complex federal criminal tax issues.  Our experienced federal criminal defense attorneys are here to help.

Tax evasion is the most common federal tax crime and involves the failure to report taxes, reporting taxes inaccurately, or failing to pay taxes. Federal law defines the crime broadly; 26 U.S.C. 7201 states, “[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony. . .” The penalties for tax evasion can include significant monetary fines, imprisonment, or both.

To establish a case of tax evasion, the Government must prove three elements beyond a reasonable doubt:

1. The Defendant attempted to evade or defeat a tax or payment of a tax;

2. An additional tax was due and owing; and

3. The Defendant acted willfully.

The Government is generally required to prove that the taxpayer owed substantially more tax than was reported; however, the Government does not necessarily need to prove the exact amount of tax evaded. In most tax evasion cases, this comes in the form of understatements or omissions of income, claims of fictitious or improper deductions, false allocations of income, or improper claims of credit or exemption.

The Government can offer direct or circumstantial evidence to prove the required elements. This may include evidence of specific transactions affecting taxable income which were inaccurately reported, unexplained increases in the taxpayer’s net worth or expenditures not reflected in the taxpayer’s net worth, or evidence of taxable receipts in a taxpayer’s bank deposits.

Finally, the language of the statute gives the crime of tax evasion a broad scope. Specifically, the crime of tax evasion applies to “[a]ny person” – not just individual taxpayers. Tax evasion under 26 U.S.C. 7201 can also be used to prosecute an individual taxpayer’s tax preparer, accountant, or bookkeeper, a corporate officer attempting to evade their corporation’s tax, or the administrator of an estate attempting to evade the estate’s tax. Further, the statute applies to “any tax” and tax evasion in “any manner” (emphasis added).

Recent tax evasion cases include the federal criminal jury trial of reality TV stars Todd and Julie Chrisley. They were convicted of tax evasion and other charges. The DOJ alleged the Chrisleys knew the law was clear on taxable income and were required to file and pay taxes. The IRS CID agent on the case was quoted as saying, “These convictions should send a clear message regardless of your fame or notoriety, everyone will be held accountable for paying their fair share of taxes.” As a result of their case, they unfortunately are now in prison.

For more information on criminal tax charges, please contact us. We are more than happy to discuss your situation.

With all of this going on, the US Attorney’s office increased its prosecutions of individuals of white collar crimes in the year 2021. White collar charges like fraud, theft, corruption, bribery, environmental crime, tax fraud, health care fraud, procurement fraud, money laundering, PPP loan fraud, etc will continue to get more attention from the Department of Justice.

What does this mean? It means that investigations of any sort need to be taken seriously and that you should contact a lawyer immediately if any wrongdoing is alleged.

Conaway & Strickler, PC has a long history of handling fraud cases of all varieties and is well equipped at fighting the DOJ in their overzealous prosecutions. Please feel free to contact us so that we can help you avoid future headaches.

According to reports by the media, the woman appeared visibly upset before the court proceedings began. The woman required removal from the courtroom and was later brought back in.

A judge recently decided to push back the trial following the woman’s outburst in court. The trial will address multiple counts of tax fraud and other related crimes that the woman is now facing. The woman had allegedly been operating a tax preparation business when arrested for a tax fraud scheme in which she had allegedly filed thousands of fraudulent tax returns in order to obtain larger tax return payments for her customers.

This will give the Georgia woman more time to prepare here legal defense strategy against the tax fraud charges. Tax fraud charges usually carry a hefty sentence; however, in order for a legal defense strategy to be effective, one must be aware of the rules of evidence and court procedures. Also, understanding the relevant criminal laws and how they related to a specific case is of the utmost importance.

A good tax fraud attorney will help in these situations.

Please see here for additional blogs on this subject.

Brooks was charged in federal court with filing false tax returns, tax fraud, wire fraud and mail fraud. He was indicted in May 2013. The representative had been accused of misappropriation of funds which were supposed to go to charity. Instead, the man allegedly used the funds to pay for family and personal expenses.

Reportedly, he had allegedly solicited over $1 million worth of contributions during the period between the mid-1990s and 2012. He told individual and corporate donors that the funds would be used to help combat illiteracy in under-served communities as well as various other causes. The allegations involved the defendant’s relationship with a tax-exempt charity which Brooks had founded in 1990. Also, the allegations involved his role as president of the Georgia Association of Black Elected Officials.

He ended up pleading guilty to one of white collar crimes charged with regard to the filing of a false tax return. He also entered a plea of no contest to multiple counts of wire and mail fraud. A client may want to consider doing this in some circumstances in order to minimize penalties or even avoid time behind bars. However, there may be some instances when a client will want to fight the charges of wrongdoing in the court of law in Georgia. As this case now proceeds to a sentencing hearing, the defense team is likely focused on convincing the court to impose a sentence at the lower end of the applicable federal sentencing guidelines.

Source: timefreepress.com, “Former Georgia state Rep. Tyrone Brooks Jr. pleads guilty to fraud and tax charges“, April 9, 2015

Please see here for additional blog entries on this topic.

The two defendants, a man and his wife, were accused of conspiring to commit wire fraud by filing fraudulent tax returns during the period beginning in Jan. 2011 and ending in Feb. 2013. The 44-year-old man and his wife were charged with one count of aggravated identity theft and one count of conspiracy to commit wire fraud. Federal prosecutors indicated that the couple filed more than 1,100 fraudulent tax returns electronically.

The couple allegedly obtained nearly $1.2 million in funds from fraudulent tax refunds. The authorities have determined that 114 calls were made to the Internal Revenue Service from the wife’s cell phone. Both of the defendants are now facing as many as 20 years behind bars and fines of as much as $250,000. Both defendants have decided to plead guilty to specified charges, likely in hopes of obtaining some leniency at sentencing.

Tax fraud charges are often complex, and the government bears the burden of proving them in court by a measure of proof characterized as beyond a reasonable doubt. The fact that someone in Georgia is accused of wire fraud and identity theft is not proof of guilt. Prosecutors must actually establish the accusations by appropriate evidence, a burden that is often difficult to meet. Nevertheless, in some cases, defendants decide they are better served by seeking a plea agreement with prosecutors in exchange for favorable consideration at sentencing. This particular case will now proceed to a sentencing hearing, and defense counsel is likely focused on presenting arguments in favor of a sentence at the lower end of the federal guidelines.

Source: walb.com, “Ashburn man pleads guilty to tax fraud“, Dave Miller, March 13, 2015

Please see here for another blog on tax fraud.

If you’re accused of committing a federal crime, your case will be handled by the federal courts rather than the court local to your state. The idea of standing before a federal judge can be understandably overwhelming, but no matter what court you appear in, you still retain the same rights and protections. Most importantly, you are still presumed innocent throughout the entirety of court proceedings.

Tax fraud: Allegations that could potentially place your case in federal rather than state court can vary. For instance, committing a crime that would usually be handled by the state can immediately become a federal issue simply by occurring on federal property. Others face federal charges for supposedly committing certain crimes in multiple states.

Federal procedures can also differ from those that are followed at the state level, and some prosecutors can and will attempt to use this to your advantage. With years of experience and knowledge behind us, our firm has a solid grasp on federal court procedures, and we refuse to let our clients be bullied into unfair and unjust corners. If you’re facing a federal charge — such as tax fraud — consider reading through the information that we have listed on our website in order to make the most informed decision possible.

Please see here for another blog on tax fraud.

According to reports, authorities arrested 13 individuals who are accused of being involved with tax fraud and identity theft. Prosecutors believe that two more suspects are involved with the alleged fraud organization, but they have not yet been arrested. Reports indicate that over 50 suspects allegedly stole identities of other individuals for the purpose of filing fraudulent tax returns. The suspects would then reportedly steal the refunds.

Please see this blog on FATCA

The investigation into this matter involved multiple agencies. The agencies included the Internal Revenue Service and the Georgia Department of Revenue. Another agency included in the investigation is the Atlanta field office of the Federal Bureau of investigation. The tax and identity theft ring is still being investigated. No other details have been reported.

Being charged with tax fraud or any other white collar crime can come with heavy consequences if a conviction is obtained. From a legal standpoint, defendants may face a harsh prison sentence and be forced to pay restitution to alleged victims. Personally speaking, defendants may lose the privilege of working in certain places of employment, particularly those that engage in financial information of consumers. Georgia defendants may reduce the chances of having negative legal outcomes by fully understanding their legal rights.

Source: therepublic.com, “15 people charged with identity theft, tax fraud ring in Georgia”, , April 24, 2014