DOJ captures tax fugitive, discusses penalties for tax crimes

On November 6, 2019, the United States Department of Justice (DOJ) announced the capture of a tax fugitive.1 According to the DOL announcement, the fugitive was a tax fraud promoter who had been on the run since the date he was supposed to start serving a 10-year prison sentence. The agency labeled him a fugitive after he failed to report for his prison sentence in March 2019.

The DOJ clarified that the 70-year old tax fraud promoter was convicted in April 2017 of submitting fraudulent financial instruments to banks and the U.S. Treasury. Additionally, he was convicted of failing to file income tax returns. The DOJ stated:

According to the evidence presented at his trial and sentencing, from approximately 2008 through 2015, [taxpayer] created and submitted more than 300 such fraudulent instruments. He also held seminars and private meetings to promote and market the use of these instruments to pay off debts, including federal taxes. [Taxpayer] sold recordings of his seminars, templates for fraudulent financial instruments and other materials through his website.

Furthermore, the DOJ emphasized that the taxpayer failed to file his 2009 through 2014 tax returns despite the substantial earnings derived from seminars, licensing fees associated with the sale of his products, and annual pension payments. During trial, taxpayer admitted to not paying income tax for at least 20 years.

The US Marshals Service apprehended taxpayer in Arizona on November 1, 2019. Thereafter, taxpayer appeared in district court and will begin serving his prison sentence shortly.

What can taxpayers learn from this case?

Although a prison sentence for a tax crime is not common, it can happen. In many cases, this type of penalty comes with a review of intent. If the prosecution can establish that the accused intentionally avoided tax obligations, as was true in the case noted above, the odds of a prison sentence increase. Specific examples of tax crimes that can result in prison sentences include:

Tax evasion. Filing a fraudulent return generally involves establishing the intent element discussed above. As a result, a conviction for tax evasion can generally lead to five years of jail time.

Failing to file tax returns. A complete disregard for tax obligations can also result in a prison sentence of a year for every year the accused failed to file their taxes.

Assisting others in evading tax obligations. Knowingly helping others get out of taxes can lead to three to five years imprisonment.

The exact sentence would depend on the details of the allegations and can be longer or shorter than the general figures noted above. As a result, it is wise to seek legal counsel if accused of a tax crime to better ensure your legal rights are protected

If you have questions or concerns about tax matters, contact Frost & Associates, LLC today at 410-497-5947.

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