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):
Instead of paying the taxes owed, Henry spent hundreds of thousands of dollars on personal expenses, including private school tuition, expensive housing and luxury cars. After the IRS assessed penalties against her, Henry stopped using personal bank accounts and instead began using business accounts to pay for personal expenses. In early 2011, prior to her home being foreclosed on, Henry transferred $130,000 to a nominee buyer, entered a sham lease arrangement with the nominee to create a false explanation as to the source of the funds in the nominee’s bank account, and caused the nominee to repurchase the home for her. Henry later used that same nominee and other nominees to purchase and lease exotic cars, including a Dodge Viper and a Porsche Panamera.