I am often asked how big is the tax due to the IRS must be before it becomes a criminal matter. Here is a new data point (from US Dep’t of Justice):
It is an unfortunate reality that businesses often have cash flow problems. A common (and also unfortunate) approach that business owners take is to hold of on turning over to the IRS employment taxes. Most business owners know that they become personally liable for a Trust Fund Recovery Penalty (“TFRP”). Almost no business owner thinks that he/she could go to jail for it. A West Virginia business owner will do just that.
Sometimes, I am asked by prospective clients about my views on various tax protester theories. A tax protester is someone who does not believe that they are subject to a federal income tax. The IRS has an entire website dedicated to debunking these theories and I warn the prospective clients that they could go to jail if they rely on them. For some reason, they never come back to me :) A few weeks ago, one of the tax protesters (no connection to me) was convicted by a jury in Maryland.
Fresh off its resounding success in finding taxpayers who were evading taxes though the use of foreign bank accounts, the IRS has a new group of tax evaders in its crosshairs: virtual currency users.
With year-end in sight, many business owners are closing the books and taking distributions from their companies. And with that comes the annual temptation to evade taxes through the use of the so-called “shareholder loans.”
I am often asked what turns a civil IRS collection matter into a criminal tax conviction. This is one story…A dentist in TN owed less than 300K in income taxes and civil penalties. Not a large amount, in my experience. Here is what happened next (and what will land her in jail for awhile):